Aid to developing world falls further, though private investment helps

PARIS (AP) — Aid to the world’s poorest nations has dropped to its lowest level in nearly 30 years when comparing what the rich nations produce to what they donate, a study said Wednesday.
However, total aid — including private investment — more than doubled in three years to more than $300 billion, according to the study by the Organization for Economic Cooperation and Development.
Developing countries, many of them ruled by authoritarian governments, can break out of their so-called poverty trap and attract more investment through improved human rights and financial reform, officials said.
OECD, the industrialized world’s official think tank, said official government aid in 1996 totaled $59.9 billion, down $4.5 billion, or 5.8 percent, from the year before.
Aid totaled just 0.25 percent of the combined gross domestic products — the sum of all goods and services produced — of the OECD’s 21 member nations, the report said.
The percentage is “the lowest ratio recorded over the nearly 30 years since the United Nations established a goal of 0.70 percent,” the report said.
Only Denmark, the Netherlands, Norway and Sweden met that target, according the report.
The report also criticized many aid efforts as lacking coordination, duplicating each other, being out of touch with local needs and failing to involve and train locals to sustain the development when aid workers leave.
Among success stories, the study cited a French project to rebuild the central market in Bamako, Mali, which was destroyed by fire in 1993. Merchants had to raise collateral to qualify for loans, which gave them a stake in the project’s success.
In an Irish Aid project in Zambia, locals were mobilized and trained to build and run village water supplies, sanitation and schools.
In dollar terms, Japan remains the leading donor, giving $9.44 billion in 1996. The United States was second, with $9.38 billion.
Michel noted that the poorest countries, most of them in sub-Saharan Africa, “attract the least in the private flow.” In contrast, only a dozen countries, many in Asia, drew about 80 percent of the total.
“The consensus in donor countries is that they’re not justified in giving aid in countries where policy is poor and governance is poor,” said the committee’s assistant director, Richard Carey.
Fully one-fifth of the world’s population lives in extreme poverty, the report said.