Some politicians have raised the question of whether the additional money could be used effectively if aid was scaled up to 0.7% GNI by 2015. There are some very good reasons to believe that it can be.
First, the world is making progress on improving coordination and effectiveness of aid. Aid donor and recipient countries have made an agreement about accountability, cooperation and coordination in aid – the Paris Declaration – which commits all countries to mutually-agreed targets about ensuring aid effectiveness.
Second, much aid is still delivered on a project-by-project basis, which is difficult to scale up rapidly. However, many Governments are moving away from delivering aid through many, fragmented projects that can be costly to administer, and towards providing aid as direct budget support (sometimes for a specific sector such as health or education). Australia should increase its commitment to support the financial and delivery systems of partner countries through this kind of budget support aid.
Third, there are critical MDG areas that already have identified needs, identified avenues for delivering financing to meet those needs, and massive shortfalls in meeting those needs. Health and education are probably the most critical areas.
In health, the Global Fund to Fight AIDS, TB and Malaria – an effective and innovative organisation – has already delivered USD 10.7 billion in funding to proven projects in 136 countries to fight these three diseases. However, it has demonstrated that a large financing gap exists in global plans to stop TB and roll back malaria. The funding gap in nationally and internationally-agreed plans to combat these two diseases will be USD 17.7 billion in the period 2008-10. Australia could substantially increase our commitment to the Global Fund in order to close this gap.
The Education For All Fast Track Initiative is the world’s first global agreement meant to fully fund the education sector plans of developing countries. However, even though developing countries have their education sector plan vetted and approved by donors, this initiative faces a three-year funding shortfall of around USD 1 billion per year for the 36 countries whose education sector plans have already been endorsed, and this shortfall will grow as more countries have their plans approved.
The need is there, and the resource gap is great. Australia could increase aid to 0.7% and be confident that it would be used effectively.
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