Some Questions and Answers on Aid

Aid is the transfer of resources from rich countries to poor countries to help alleviate poverty and suffering. Here are some great answers to some tough questions on aid.

What is aid?
Aid, or Official Development Assistance (ODA) is the transfer of resources from rich countries to poor countries to help alleviate poverty and suffering. In the poorest countries, aid helps finance vital public services, such as health, education, water and sanitation. Aid can be provided directly from one government to another, through multilateral agencies like the World Bank, or through a non-governmental organization like Oxfam.

How much aid does Canada give?
 In 2010, Canada’s aid rose to over $5 billion for the first time. However, the government says aid will be frozen at that level through 2015. Canadian ODA is now equivalent to 0.33 percent of the economy (GNI); the freeze is expected to reduce that figure to 0.28% by 2015. Canada’s current level falls well below both the agreed international target of 0.7 percent of GNI, and the current donor average of 0.47 percent. Canada gives less aid than countries of similar population and economic clout, like Spain and the Netherlands.

Why should aid address gender inequality?

A society that systematically discriminates against women and girls is losing out on half of its talent. Around 70 percent of the 1.3 billion people who live in extreme poverty are women and girls. Due to entrenched discrimination, women are less likely to have access to resources, less likely to be educated, and have less access to health care. Aid can help address gender inequalities by supporting organizations that champion women’s rights and foster empowerment.

How does aid help?
 Aid provides critical funding for programs that developing countries cannot finance on their own, such as training health professionals and teachers, building necessary infrastructure and institutions, and providing humanitarian relief in disasters. Aid helped Mozambique train health workers and build health centres, and the number of children who die before their fifth birthday has come down by almost 20% in the last decade.

Why should rich countries give aid?
Rich countries should give aid to help alleviate suffering. Aid should be provided because it works: thanks to aid, 40 million more children are in classrooms around the world, and HIV/AIDS treatment is reaching ten times more people than just five years ago. It is in everyone’s best interest to have a healthier, better-educated global population because it leads to a safer and more prosperous world.

How much aid should rich countries give?

In 1970, donor countries at the United Nations set a target of 0.7 percent of gross national income (GNI). Despite reaffirming this target repeatedly, by 2009 only Denmark, Luxembourg, the Netherlands, Norway, and Sweden had reached or surpassed it. Overall, donors are giving an average of 0.47 percent of GNI. In 2005, a unanimous motion in the House of Commons called on Canada to reach the 0.7 percent target by 2015.

What laws govern Canada’s aid?
In 2008, Canada passed the Official Development Assistance Accountability Act, which requires all aid to contribute to reducing poverty, to take into account the perspectives of people living in poverty, and to be consistent with international human rights standards. It also requires the government to report to Parliament on the aid program each year.

Can aid support democracy?
When delivered properly, aid can empower developing country governments and their citizens. Aid to help ensure access to education allows people to take a more active role in holding their governments accountable. Aid can directly fund independent watchdogs and Parliamentary commissions to fight corruption.

What is tied aid, and why is it important to untie aid?

Aid is tied when it is given on the condition that the recipient will use it to purchase goods and services from the donor country. Tied aid increases costs by between 15 and 30 percent, so untying aid gives taxpayers more value for money. Purchasing local goods and services with aid money saves transportation and shipping costs, as well as contributing to the local economy. In 2008, Canada committed to untying food aid immediately, and to untie all aid by the end of 2012.

What does it mean for aid to be predictable?

Aid is predictable when partner countries know how much aid is coming and when, so they can plan effectively. Unless governments are assured of multiyear funding, they cannot invest in hiring teachers or nurses, for example. Oxfam believes donors should allocate aid on at least a three-year rolling basis. Currently, Canada gives aid on a one- to three-year basis, but has pledged to move towards a three-year delivery program.

What does it mean for aid to be transparent?

Aid is transparent when donors make public in an accessible format how much money is being provided, to whom, and for what. Canada has not yet signed on to the International Aid Transparency Initiative, which commits donors to making all aid information easily accessible in a standard format. (Twelve donor countries and five multilateral agencies have.) Canada has improved its reporting to Parliament, but information on our aid is still not available in recipient countries, where citizens could use it to hold their governments to account.

What does it mean for aid to be accountable?
Aid is accountable when citizens in the donor and the recipient countries can ensure it is spent properly. Transparency is obviously essential, but so is local monitoring of aid by independent parties and Parliaments. In Malawi, for example, Oxfam helps the Malawi Economic Justice Network track the flow of aid money in the national budget.

Does aid encourage corruption and dependency?
While not all aid succeeds in its objectives, it is a myth that aid fuels corruption and encourages dependency. Rooting out corruption requires effective accountability mechanisms, like an auditor general, as well as justice systems (police and courts). Targeted aid can help strengthen those very mechanisms. Aid can also help countries achieve sustainable economic growth, and thus graduate from dependence on aid.