Tag Archives: poverty reduction

Smart procurement for food security

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Eurodad  has produced a new briefing on smart procurement and food security.

Procurement is an important share of economic activity in any country. In most developing countries, public procurement is either the main or second area of government expenditure, often with considerable finance from Official Development Assistance (ODA).

Smart procurement can make a major contribution to the eradication of hunger and poverty in several ways. Local and regional procurement can support the development of the domestic economy, such as in the agricultural sector. Smallholder farmers, mainly women, can benefit from new opportunities by creating new markets and raising incomes. Moreover, the use of country procurement systems increases ownership and domestic accountability in recipient countries. Open and efficient public procurement practices can contribute towards the sound management of public expenditure and poverty reduction through delivery of public services in health, education and infrastructure.

In the last decade, the international community has committed to ensuring aid effectiveness, by untying aid and using recipient countries’ procurement systems as the first option. Despite this, donors keep tying their aid and influencing developing countries’ government policies. Eurodad research shows that two thirds of contracts awarded by bilateral donors still go to firms from Organisation for Economic Co-operation Development (OECD) countries.

Some initiatives have already arisen in support of local procurement, such as the World Food Programme’s Purchase for Progress. Brazil and India have also launched their own national food purchase programmes and are sharing the expertise and lessons learned.

Food advocates and campaigners have an opportunity to put smart procurement at the top of the international agenda. Donors should stop thinking of aid, especially food aid, as another channel to export agricultural surpluses and consider its purpose in helping developing countries to be independent and to provide for their own people.

Read the full briefing: Smart procurement for food security

Progress on IMF conditionality?

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A first reading of the press statements and overview paper from the IMF’s review of conditionality, completed in September 2012 might give the impression that the IMF has made a 180 degree turn in its conditionality policy, one of the most controversial aspects of the Fund’s role. However, the transformation doesn’t seem as complete as the IMF argues. Harmful conditions are still being imposed, not only to developing countries, but also in Europe, and the IMF claim to have increased its focus on poverty reduction and social protection seems uneven, both throughout countries and time.  Has the IMF really change the way it sees and implements conditionality?

As a thoughtful reading of the conditionality review papers shows, lending reforms and changes in conditionality have already had some impacts in the way the IMF deals with countries under different Fund programs, but much more can and must be done.

The IMF claims for instance to have internalized the objective of poverty reduction in the programmes in low-income countries, but outcomes seem uneven. They recognise that there’s a need for a better and more systematic analysis of social impact of policy measures in programmes. One of the main challenges remaining is therefore to monitor and evaluate, both quantitatively and qualitatively, the impacts of IMF policies in the most vulnerable people.

As the review concludes, debt relief is responsible for the only observable macroeconomic positive effects of IMF policies in low-income countries, including not only sustainable debt levels, but also an increase in social spending. In a time when, after HIPC and MDRI, there will not be a specific debt relief initiative in place for those countries in debt distress, and the chances for having a new debt crisis, not only in Europe but also in the global South, are growing, there’s also an urgent need to evaluate what will happen when no further debt relief is a resource for impoverished and highly indebted countries.

Furthermore, and as the IMF recognises, more efforts in ownership and transparency are also vital for the programmes success, and a better analysis on projections and evaluation would also help. The role of CSOs in monitoring and fostering these transformations is vital for assuring further change within the IMF. Some changes are certainly happening, mostly at a slower pace than what is needed. But the IMF has still a long way to go to be a fully democratic, transparent and efficient institution with no harmful conditions imposed on the countries.

The following briefing analyses these and other issues that arise from the IMF review of conditionality.

Committee on World Food Security takes step towards pro-poor procurement

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by Francesca Giubilo

The 39th session of the Committee on World Food Security (CFS) drew to a close on 20 October. Its final report endorsed some interesting recommendations, including a clear message to support local purchases. Recognising the relevance of local procurement for food security may hint at a positive change in mindset for the years ahead.

Based on the High Level Panel of Experts’ report on social protection and food security, the CFS – the most inclusive international and intergovernmental platform for all stakeholders working on food security and nutrition – recommends that Member States and international organisations should launch programmes aimed at supporting “agricultural livelihoods and productivity for the poor”. In an exhaustive list that includes “production input support” and “agricultural livelihood packages and extension services”, there is a strong message on procurement, supporting “home-grown school feeding that purchases food from local smallholder farmers”. In line with recent Eurodad research, buying locally is recognised as an important way of developing domestic resources and eradicating hunger.

Over the years, pro-poor procurement has come back onto the international agenda, including at the High Level Forum on Aid Effectiveness and the recent Rio+20 meeting. Research conducted by Eurodad highlights how sustainable and public procurement can generate income, reduce costs and support the transfer of skills and technology. Local procurement allows aid monies to have a double dividend and to support domestic enterprises. It helps smallholder farmers to access markets, as well as strengthening farmers’ organisations. Moreover, through the use of country procurement systems, developing countries’ governments can increase their accountability and ownership, which allows them to launch social programmes efficiently and to provide for their own people.

However, the CFS also includes another element in the list above: the “in-kind transfers”, which is problematic. At present, some countries abuse this food delivery system to raise the incomes of their own agribusiness companies, instead of boosting domestic resources. Strong positions must be taken against this form of food assistance. Eurodad has been fighting for smart procurement and untying aid for a long time. For instance, with the support of partner organisations, we are currently calling on the World Bank to review its procurement policies and to promote pro-poor procurement guidelines.

The CFS recommendations are a small step forward in this struggle. Nothing will happen overnight, but now is the time to make faster progress and to convert this positive change in the international mindset towards something concrete.

An updated summary of “How to spend it: smart procurement for more effective aid” report

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Procurement is a keystone in development finance. Eurodad estimates that US$ 69 billion of aid money is spent on procuring goods and services annually either by donors or by recipient countries, more than 50% of total Official Development Assistance (ODA). Procurement practices are, therefore, key to ensure that aid delivers the best development results. More than ten years after initial agreements to untie aid, two thirds of contracts awarded by bilateral donors still go to firms from Organisation for Economic Cooperation and Development (OECD) countries.

Aid untying is essential for smart procurement as well as the use of country systems, which increases ownership and domestic accountability, and improves the chances for local firms to win contracts. Much more can and must be done to fully exploit the potential of targeted and wellregulated procurement, which can yield a double dividend for poverty eradication and sustainable development.

Read the full updated summary: How to spend it: Smart procurement for more effective aid

Download the full report published on September 2011 in different languages: How to spend it: Smart procurement for more effective aid

US food aid contracts: what lies beyond aid?

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By Francesca Giubilo,

Is the real purpose of aid to eradicate poverty or is it just another excuse to allow rich firms to raise their own incomes and boost the economy of developed countries? Recent research conducted by the Guardian has assessed that two-third of the US food aid contracts are awarded to three of the biggest agribusiness companies. (Louis) Dreyfus; ADM, Bunge and Cargill, also known as the ABCD group, account for between 75% and 90% of the global grain trade, yet receive the majority of US food aid contracts.

So, what lies beyond aid? Food aid refers to a specific category of ODA aimed at reducing hunger and starvation either in the short term, through emergency operations, or in the long term. However, an Oxfam study which assesses the inefficiency of US food aid, points out that in 2010 it reached roughly 65 million people despite spending more than $2 billion. According to this research, US food aid would have been able to reach between 4.8 million and 7.3 million more hungry people if food was purchased locally.

Although the US is the largest provider of food aid, accounting for 56% of all food aid, it still uses its food aid programme as ‘corporate welfare’ for its own companies. US food aid is problematic as it relies on “in-kind” food and shipments from US suppliers, spending most of the aid on transportation and non-food items. A more productive and less costly alternative would be to procure directly from local and regional markets in the affected areas as that would not only provide food, but also boost the incomes of local farmers and suppliers.

Studies show that multiple benefits can be achieved through local and regional procurement in terms of timeliness and cost-effectiveness as well as boosting domestic resources, accountability and country ownership, which are the core issues of Eurodad proposals on aid effectiveness.

How much longer do we have to wait before donors change their mindset towards food aid and developing countries? Food aid should not be another channel to export agricultural surpluses and to pay back political favours at home, rather it should be a tool, whose main aim should be to help developing countries to be independent and to provide for their own people.

Despite some steps towards the reform, US efforts must decouple aid from narrowly defined national or sectoral interests if developing countries are to truly benefit from these financial flows. Time for change has come! No more excuses!

AidWatch report 2012

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The AidWatch Report 2012, ‘Aid We Can: more investment in global development’, written by CONCORD, the European confederation for Relief and Development NGOs, shows that:

9 EU countries beat aid targets, but Germany and France missed the mark in 2011. Luxembourg, Sweden, Denmark, the Netherlands, United Kingdom and Malta (the only EU 12 country), Belgium, Finland and Ireland all met their targets. Germany and France however are way off track, both giving less than 0.5% of their GNI to development aid.

Aid budget cuts are becoming a major trend, with €500 million slashed from total EU aid spending in 2011. 11 EU countries cut their aid levels last year, with 9 countries planning further cuts in 2012. Spain and Italy are likely to face the biggest cuts; 53% and 38% respectively. Total EU aid amounted to €53billion in 2011.

14% of EU aid or €7.35 billion didn’t reach developing countries in 2011. Genuine Aid, that represents a real transfer of resources to developing countries, is highest from Luxembourg, Sweden, Denmark, the Netherlands, the UK and Ireland.

Aid commitments achievable but major donors off track

All EU countries are, in principle, committed to giving 0.7% of their GNI to development aid. “Even in times of economic crisis, many European countries have shown that’s possible to keep their aid promise to the world’s poorest. Unfortunately other EU countries are cutting aid at a time when developing countries need it most. Larger countries like France and Germany need to step up their game and not shy away from their commitments,” Ben Jackson, Chief Executive of Bond, the UK NGO network.

Crisis hitting aid to the poor

“Reduction in aid volumes is just one side of the coin. The other side – how the aid is used – is just as worrying. In times of crisis, it is important to keep aid focused on tackling poverty, not on deepening the EU’s commercial and security interests. The latest trends from the EU in this respect are of great concern to ActionAid and its partners,” says Arthur Larok, Country Director of ActionAid Uganda.

Genuine Aid: how much really goes to developing countries?

“People need to be able to trust that aid is making a difference, it should be transparent and truly reach the poorest in developing countries. If not, how can we guarantee sustainable results? Some European countries are an example like Sweden and Luxembourg. But it’s a shame that other EU governments play numbers games that affect the lives of the poor. Over €7 billion in EU aid is wrongly accounted for, and just doesn’t get to the poor.” says Caroline Kroeker from World Vision International.

In 2011, EU governments wrongly accounted as aid: €2.43 billion as debt relief, € 1.82 billion as refugee costs, €1.61 billion as student costs account, €0.98 billion of tied aid €0.51 billion as interest repayments on loans.

Download the full report: AidWatch Report 2012

The 2012 DATA report

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Eurodad member ONE  has released a new report  which assesses Europe’s progress in keeping its ambitious promises for aid increases and aid effectiveness.

The past decade was one of unprecedented growth for sub-Saharan Africa, while the next decade holds both extraordinary opportunities and challenges. From 2000 to 2010, development assistance to sub-Saharan Africa increased by over €14.71 billion.Most of that (62.7%) was related to the Gleneagles commitment period between 2005 and 2010.

During the same time, regional economic growth averaged between 4% and 7% (except for 2009) and Africa was home to six of the world’s ten fastest-growing economies. Sub-Saharan Africa’s advance in development indicators during that period matched its impressive economic track record:

  •  46.5 million more children enrolled in primary school;Agricultural production in 17 sub-Saharan countries increased by more than 50%;
  • More than 5 million HIV-positive people gained access to antiretroviral treatment; and
  • Twelve sub-Saharan African countries saw child mortality rates decrease by over 4.3% a year (the rate of decline that is needed to meet the Millennium Development Goal) and three countries – Senegal, Rwanda and Kenya – have seen falls of more than 8% a year.

 Due to this strong growth, several sub-Saharan African countries have now graduated to middle-income status, and many more could join them over the coming decade. For these latter countries, ‘smart’ aid coupled with accountable domestic investments will help to protect progress already achieved and accelerate further progress.

Download the full report: The 2012 DATA Report

Smart spending to support sustainable development: time for a positive G20 agenda on procurement

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Eurodad in conjunction with Latindadd have produced a briefing on G20 agenda on procurement.

Mexico has set out five priorities for this year’s G20 summit. They pick up existing themes of past summits, including food security, strengthening financial systems and improving the economic architecture, but add an additional cross-cutting priority:

“Mexico is convinced that the aforementioned priorities have to be enclosed by a renewed political commitment to sustainable development and green growth.”

This emphasis is no surprise, as June’s G20 will directly precede the UN Conference on Sustainable Development in Rio De Janeiro. One key way both summits can help developing countries to create poverty-reducing sustainable economic development is through supporting improved public spending, both by developing countries themselves, and by donors. In particular, the way governments and donors procure goods and services from the private sector can help drive development.

Read the full briefing: Smart spending to support sustainable development: time for a positive G20 agenda on procurement.

For the Spanish version, please click here: Gasto inteligente para apoyar el desarrollo sustentable: es el momento de una agenda positiva del G20 sobre contratación

Enhacing the IMF’s focus on growth and poverty reduction in Low-income countries

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Eurodad members Save the Children Norway, the Norwegian Forum for Environment and Development and the Norwegian Church Aid (NCA) have commissioned this report from Development Finance International, to analyse whether the new facilities are living up to this objective, and allowing countries to move faster towards the Millennium Development Goals. They asked DFI to look particularly closely at impact on the health sector. The paper analyses all 37 PRGT agreements, and presents case studies of Honduras, Malawi and Sierra Leone, written by local experts closely involved in IMF-government discussions. As the new facilities began only in 2010, this assessment should be seen as preliminary.

The report makes clear that the IMF is not, and should not be, a long-term development lender. However, it has committed to enhancing its focus on growth and poverty reduction through the PRGT, and donors have provided concessional funding to the IMF to support the PRGT on this basis: the facilities should therefore be judged on whether they are achieving this goal. The report also makes clear that it is analysing trends resulting from IMF-government agreements, not ascribing “responsibility” to the IMF for all trends and their impact on MDG prospects.

Overall, the report concludes that there is only very limited evidence of an enhanced focus on growth and poverty reduction compared to the previous PRGF facility programmes: mostly the PRGT has formalized or standardized evolutionary changes which have been occurring since 2000. There have been some steps forward showing increased flexibility by the Fund, but most were introduced before the PRGT, and those relating to macroeconomic policy look increasingly fragile.

Read the full report: Enhacing the IMF’s focus on growth and poverty reduction in Low-income countries