Cité Soleil, Haiti’s largest shanty-town, is located on the waterfront to the north of Port-au-Prince. Credit: Caroline Irby/Oxfam
Aid is a vital lifeline for the poorest people, especially in these brutal economic times

Aid still at 1993 level despite increase

“Aid levels remain tiny compared to the economies of rich countries, just 0.3%. Far more is needed, and needed now”
Max Lawson
Head of Development Finance, Oxfam
Published: 30 March 2009

Commitments to combat poverty still not met, aid dwarfed by bank bailouts

The 10% increase in foreign aid to $120 billion is welcome but still nowhere near enough to meet the needs of poor countries in the face of global economic meltdown, said international agency Oxfam International said today.  At just 0.3% of national income, aid is at the same level it was in 1993.

Global aid levels – published today by the Organisation for Economic Co-operation and Development in London – are also minimal in comparison to the $8.4 trillion mobilised to prop up ailing banks, Oxfam said.  At $173 billion, the American Insurance Group (AIG) alone has received $50 billion more than total global aid levels.

Oxfam Head of Development Finance, Max Lawson said: “Despite this welcome increase, aid levels remain tiny compared to the economies of rich countries, just 0.3%.  That is the same as it was in 1993. They have found 70 times more, $8.4 trillion, to save banks.  Aid is an absolutely vital lifeline for the poorest people, especially in these brutal economic times. Far more is needed, and needed now.”

“Rich countries can come up with the money when they want to. AIG’s executive bonuses alone could have paid for enough teachers for 7 million children in Africa.  We need to see the G20 move fast in London this week to rescue babies not just bankers,” Lawson said.

Foreign Direct Investment into developing countries has collapsed by more than $700 billion dollars since 2007, more than six times total aid levels. Remittances are also falling rapidly as unemployment rises in the rich world. Global trade has ground to a virtual halt. Aid is needed now more than ever to help the poorest countries weather the economic tsunami.

The OECD’s figures show that aid has increased by 10% in real terms in 2008 to $120 billion. However Sub-Saharan Africa- despite being the poorest region on earth – only saw a tiny increase of just 0.4% to $22.5 billion.

Most rich nations still have a mountain to climb to meet their 2005 promises to increase global aid by $50 billion by 2010, with half of this going to Africa. Italy, the G8 chair in 2009, is the worst offender. The OECD calculates that Italy will need to increase its aid spending by 145% to meet its promise. The shortfalls must be acknowledged and a clear timetable set to increase aid to meet pledges.

“Aid alone is not enough for the poorest countries to escape the poverty trap, but quality long-term aid does make a huge difference. Poor country governments have used aid to scale up spending on education and health to help fight poverty. The Tanzanian government used its aid income to offer free schooling to its primary-aged children – and now 3.5 million more children are now in school. Tanzania also used aid to strengthen its health services, helping to reduce the number of children dying in their first year of life by almost a third,” Lawson said.

More information: Oxfam comparison of 2008 ODA figures with promised increases, military spending and bank bailouts.