Look South for the Future of Aid

It is possible to catch a glimpse of the future of international development in the well-appointed reception areas of Latin America’s five-star hotels. There, beneath the ubiquitous crystal chandeliers, one often finds charity boxes requesting donations for the victims of Hurricane Sandy, Syria’s civil war, and natural disasters in Haiti.

More and more homegrown charities are busily advertising how just a few dollars can provide life-saving assistance for the desperate residents of Newark, Damascus, and Port-au-Prince. The messages are apparently convincing: the boxes are stuffed with billfolds of local currency, a testament to the charitable impulse of the region’s well-heeled elite.

For generations, there has been just one formula for global development accepted by polite society: industrialized western societies voluntarily provide official development assistance (ODA) to the unfortunate poor of Africa, Asia, and the Americas. Over the decades, a number of “theories” have been proposed about what makes for effective ODA. The most recent of them focus on conditioning aid dollars to improvements in “good governance” among recipients themselves. Broadly speaking, ODA has routinely aligned with foreign policy and market interests, and included accountability mechanisms designed to ensure that the hard-earned tax dollars of Western citizens spent overseas also result in tangible benefits at home.

Yet, over the past two decades the tectonic plates of the aid world have shifted. The theories developed so far, based on single prescription from an earlier era, may not provide an adequate framework for the future. Most aid agencies in the rich world have been slow to catch on to the transformations underway. And as the Canadian government launches an ambitious and wide-ranging overhaul of its development policy – most notably through the integration of Canada’s international aid agency (CIDA) into the Department of Foreign Affairs and International Trade – it would do well to recognize just how much the ground beneath its feet has moved.

The architecture of development assistance was originally constructed around the transfer of material and technical assistance between governments, known as donors and recipients. During the Cold War, these donors were roughly divided between Eastern and Western bloc countries while recipients were widely distributed across the Southern hemisphere. Both blocs were anxious to chalk-up successful recipient models to their side. This arrangement continued for more or less five decades. By the end of the twentieth century, donors were still predominantly members of the club of rich countries known as the Organization for Economic Cooperation and Development (OECD).

The first indication that the aid pillars were swaying coincided with the arrival of a host of emerging powers, including Brazil, China, India, Turkey, Qatar, and others, to the table. Many of these countries had long provided technical assistance to their neighbors and allies but rapid economic growth encouraged the elevation of development assistance among their strategic priorities. Meanwhile, the private sector – including philanthropists, foundations, multinational companies and banks – also started assuming a more prominent role in the aid business. Civil society also became increasingly active. The advent of new technologies sparked the creation of hundreds of citizen groups with a flexible means of getting resources to those who need them and no longer reliant on  middle-men. The aid business is today a crowded market and established players are having a tough time keeping up.

While debates over the future of traditional aid are discussed by diplomats and practitioners in New York and Paris, established donors, including international agencies, are falling behind the curve. The United Nations and the World Bank, for their part, are rapidly losing relevance in an increasingly competitive aid market. Some bilateral and multilateral organizations recognize that their future resides in a small cluster of especially unstable and fragile countries where poverty and inequality are most entrenched. Others are calling for a greater emphasis on the promotion of so-called triangular and south-south aid. These debates have taken on a more urgent tone as the financial crisis has ripped through the industrialized world and as Western countries – including Canada – search for new markets and sources of economic growth.

Canada’s geographic location, security priorities, and recent declarations about prioritizing security, democracy, and development its own hemisphere make Latin America and the Caribbean clear priorities. Countries across the region are actively adjusting to the transformations in the aid market, and pushing forward significant changes to their own aid policies. Specifically, Brazil, Chile, Colombia, and Mexico – after decades of being on the receiving end of ODA – have all established their own development agencies and are steadily increasing their aid portfolios. Brazil, for example, now disburses as much aid as Sweden. It has opened more than 30 embassies in the past decade, and is expanding cooperation across its own neighborhood and throughout Africa and Asia.

An even more interesting window onto the future of aid cooperation is Colombia – a country that is still listed as one of the top 20 sites of focus for Canadian development dollars. As of 2013, the Colombian government supported over 60 new aid projects in dozens of countries. Featuring considerable expertise (owing to support from the United States) in fighting narco-traffickers and organized crime, the country is developing a new style of “police diplomacy” in Central America and the Caribbean, and as far away as West Africa. In a previous era it was Canadians, wearing blue helmets, who sought to stabilize many of these regions. But today, with new threats to security and novel challenges for state-building, it is countries like Colombia that have valuable know-how to share. It currently fields 34 police serving with UN operations in Haiti, Guatemala, Guinea Bissau, and Sierra Leone, and since 2010 has trained more than 14,000 police from 50 countries, including 7,000 from Mexico.

In some ways, the stepping-up of countries like Brazil, Colombia, and Mexico is an inevitable by-product of the growing political and economic clout of Latin American, Asian, and Middle Eastern societies. Traditional ODA from western donors now accounts for less than 1 per cent of the budgets of many of these countries. It is little wonder that North American and Western European aid agencies feel they are losing leverage and generating only middling impacts. This is not to say that they have not made formidable contributions in the past. Nor is it necessarily the case that these governments are adopting enlightened positions when it comes to aid policy or investing in critical independent thinking on the domestic front. But what external donors can and should seek to contribute in this new environment is now open to serious interrogation. In the meantime, we can probably expect the charity boxes across the south to keep proliferating.