newritings

March 17, 2009

Lack of money is not the problem

Filed under: interview — newritings @ 10:06 pm

This is an old, short piece which I wrote whilst working with the national NGO coalition in South Africa. It appeared in another journal, in 2007, and I wondered given the current phase of capitalisms crisis and the fear that Africa and the Global South are being marginalised, whether  this is still relevant. Anyhow, you be the judge.

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Had the rich countries lived up to promises they made in the 1970s, many of the new development financing initiatives might not be necessary today, writes Hassen Lorgat of the South African NGO Coalition, Sangoco.

Voices from the Global South must be heard

Voices from the Global South must be heard

The recent conference in Oslo on the mobilisation of resources for development considered technical approaches towards establishing a global architecture for raising financing for Aids, malaria and tuberculosis treatment, as well as meeting the eight Millennium Development Goals.

When considering the deliberations of the meeting, it is important to bear in mind that these are modest goals that could easily have been reached if, as the Mexican Ambassador at the conference reminded delegates, “all developed countries had delivered on their 40 year old commitment of giving 0.7 per cent of Gross National Product towards development aid”.

Indeed, new efforts at raising development financing must not displace older commitments. In October 1970, the UN General Assembly adopted Resolution 2626, the International Development Strategy for the Second United Nations Development Decade. Through that resolution, developed countries agreed to increase their resource flows to developing countries to a level equivalent to 1 per cent of their GNI and that a minimum of 0.7 per cent of GNI should be made up of official development assistance. They agreed to work to reach these goals by 1975. It goes without saying that these resources were to be new money and not taken out of existing ODA.

The proliferation of efforts towards mobilising new resources for development – GAVI, the digital solidarity fund, the air passenger levy, the regulation of tax havens and the currency development tax levy – would not be necessary if countries complied with their commitments. The real issue is not the shortage of funds for development, but rather structural inequality and unjust distribution of resources and power.

The MDGs are a set of time-bound targets for drastically reducing extreme poverty around the world, and for substantial improvements in health and education. At the United Nations Millennium Summit in 2000, 189 countries, the largest gathering of heads of states ever, endorsed the goals and committed themselves to their achievement by 2015. Since that time, organisations across the globe have convened and collaborated on campaigns to raise awareness of the critical importance of the goals, and to compel world leaders to fulfil their promises of additional quality funding, trade reform and debt cancellation to achieve the goals.

The new funding mechanisms are vital initiatives that may well have far reaching implications for development if they really are new money (and not taken from ODA budgets).

The tax on aviation, which today represents 3 per cent of global CO2 emissions – “the fastest growing sources of greenhouse gases globally” – will be nationally implemented but internationally coordinated. Initially, four countries launched the levy: France, Chile, Côte d’Ivoire and Mauritius, with another 16 committed to implementing the levy. Many of these countries are expected to get parliamentary endorsement for the levy this year. All resources raised will be pooled into UNITAID, whose mission is to scale up access to treatment for HIV/Aids, malaria and tuberculosis.

According to President Lula and President Chirac, who launched the levy, “a tax on foreign exchange transactions is technically feasible”. The Stop Poverty Coalition has shown that levying the currency transaction tax at a rate of just half a basis point (one hundredth of 1 per cent) would not disrupt markets, and it would not make financial sense to evade them. It has been suggested that even at the lowest rates proposed, large revenue can be generated: USD 20 million per annum from Chile, USD 30 million from Brazil, USD 220 million from Norway, over USD 2 billion from the United Kingdom. Euro transactions alone would generate USD 4.3 billion a year.

Yet mobilisation of new funds is not a purely technical task. It must go hand in hand with changing the structures and systems that give rise to poverty and inequality. We must work simultaneously at the global level, and particularly at the national and local levels. Only by working this way can we ensure action for justice and accountability from those who hold power.

Thus, while I believe a small and modest initiative by a “coalition of the willing” is useful in building multilateral action at the global level for a just world, the sparse attendance of some of the main actors from the South – the government of South Africa, for example, Brazilian civil society organisations, and representatives of the Technical Group of the Initiative on Hunger and Poverty Human Development is worrying. Sustainable development means acting today for future generations and putting people first. Any measures that result in undermining people’s autonomy and right to determine their own destiny must be opposed. Development means “acting with people” and not simply “for people”. Thus the participation of Southern governments and NGOs must be integral to the processes and the resolution of these fundamental challenges of our epoch.

First published in Development Today, DT_2/2007 February 13, 2007

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1 Comment »

  1. On the other hand Zambian economist, Dambisa Moyo, is calling for less aid money for Africa and proposes that the solution is free-market capitalism. This morning on National Public Radio, I heard an interview with Dambisa Moyo,a former World Bank consultant and former global economic strategist at Goldman Sachs in London. The NPR interview was pegged on the launch of her new book today, Dead Aid, in which she argues that aid to Africa has perpetuated poverty, and in some cases made it worse.

    I have not yet read the book, but here are some of her on-air comments:
    Dambisa Moyo: “I believe that having an aid-dominated society discourages entrepreneurship, it makes the government unaccountable and obviously it supports rampant corruption through government, but also to the wider population.”

    Steve Inskeep: “So as you saying that rather feeling guilty about Africa, Americans should feel greedy about Africa, and invest the remains of our portfolios in Africa?”
    Dambisa Moyo: “I’m just saying that the aid model to Africa is definitely predicated on pity and African doesn’t need pity. I think its time we started to innovate away from a system that has not delivered those things and we should do what we know is the right way to actually deliver growth and to reduce poverty.”
    (Source – http://www.npr.org/templates/story/story.php?storyId=101986498)

    And, here is a review by (her former) economics professor at Oxford University, Paul Collier.
    (Source – http://www.independent.co.uk/arts-entertainment/books/reviews/dead-aid-by-dambisa-moyo-1519875.html)

    Comment by shenid — March 18, 2009 @ 2:35 am | Reply


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