What the changing aid landscape could mean for developing countries

Tuesday April 23 2013

By Emmanuel R. Nshakira

Changing aid trends

Over the last week two events that might have implications on existing and emerging aid landscape happened.
On March 21, 2013 Daily Monitor reported that the government was in the process of securing approximately Shs219 billion for the “Skilling Uganda Programme” under the Ministry of Education.

The article stated that this will be one of the highest [donor] funded programmes in the Ministry. After carrying out some initial research about this programme, and whilst there was little information, it was launched by President Museveni in October 2012.

A web source from the Office of the Prime Minister (OPM) notes the president saying that the programme will introduce reforms that will “heal Ugandans” from the colonial legacy that put high esteem academic education to white collar jobs and a negative mentality towards technical and vocational education.

I also found a draft strategic plan (2011-2020) for Business Technical, Vocational Education and Training (BTVET) titled “Skilling Uganda” which seemed (though not expressly) related to the programme.

Other sources show that the programme has already garnered substantial donor financial support from Belgium and the World Bank to the tune of close to $62.5 million and the whole project would cost $870 million over ten years.

Advertisement

The Daily Monitor article indicated that the funds about to be secured were from Organisation of Oil Producing and Exporting Countries, Islamic Development Bank, Saudi Fund for International Development, Kuwait Fund and the Arab Bank for Economic Development in Africa.

The second event that potentially has implications on the aid landscape was the reading of the United Kingdom’s (UK) budget for 2013/14 on March, 20 2013.

The financial year in the UK starts in April. During the budget reading, whilst the Chancellor of the Exchequer, George Osborne, reiterated UK’s commitment to spend 0.7 per cent of Gross National Income on official development assistance.

He said the budget for the Department of International Development (DFID) would be slashed by £135 million ($204 million) in 2013/14 and then £165 million ($250 million) in 2014/15, following on from DFID’s budget shakeup in 2011/12.

Since 2010/11, DFID’s bilateral gross public expenditure on development has been reducing and is projected to decrease further with countries such as India, with over 450 million people in poverty, being phased out by 2015.

DFID is a major donor to Uganda, spending an average of over $126 million from 2005 to 2011 but what do DFID’s budget cuts imply for major recipient countries.

In retrospect, aid received by Uganda as recorded in the OECD DAC database reduced by over $200 million, from $1.7 billion in 2010 to $1.5 billion in 2011.

With several donors stopping aid flows in 2012 due to corruption scandals, it is envisaged this reduction in aid will continue.

Why are these two events important for Uganda? On March 27, 2013, the think tank Overseas Development Institute (ODI) hosted an event called “the age of choice: developing countries in the new aid landscape”.

At this event, economics and development professionals argued that as countries such as the UK continue to re-affirm their dedication to international development, realties in aid reduction imply that developing countries, such as Uganda, will increasingly seek funding from non-traditional donors, mostly from the emerging economies such as China and Gulf States.

The key questions therefore are: is the emerging aid landscape phasing out traditional donors? As economic upheavals continue to unravel through western economies, what does this imply for their international development programmes?

Does the economic crisis impact on traditional western donor countries bring new opportunities for developing countries? And, how much trickledown effect will overall aid reductions from traditional donors have on their recipient country?

The author is an Analyst with Development Initiatives’ Africa Hub. Email: Emmanuel.rukundo@devinit.org.

Advertisement