The End of Aid’s Golden Age?

As rock star and aid champion Bono lies prone in his sick bed with a back injury that has forced him to cancel his forthcoming festival appearances with his band U2, he will be wondering not just about how to spend his summer but what to do next in his campaign for more aid for the developing world. While he can be pleased with what (most of) the rich world has done to deliver on the big aid pledges made five years ago at the G8 Gleneagles Summit, the next five years look more uncertain as governments around the world tighten their belts. Is this the passing of the brief golden age of aid?

Every year since the Gleneages summit, Bono’s lobbying organisation, the One Campaign, has published the DATA report, in which it grades the generosity of the rich world. The commitments made at Gleneagles ran to 2010, so this year’s report will be the last. “The G7 are on track to deliver a $13.7 billion increase, or 61% of the development assistance increases promised”, is the good news (well, a B is a pretty good grade for governments).

Top of the class is the UK, which under Tony Blair’s leadership at Gleneagles joined Bono and friends to gang up on the (other) heads of state and shake them down for more aid cash. The US, Canada and Japan all get a pat on the head for meeting or exceeding pledges that were, the report says pointedly, “modest”. Germany and France are acknowledged for making some improvement yet also chided for their boastfulness, as they only stumped up a quarter of what they promised.

Bottom of the class comes Italy, which the DATA Report does not even give a pass mark for effort. “Italy is an utter failure as a member of the G7,” says headteacher Bono, unequivocally.

As he looks forward in the report, Bono does his best to be optimistic. “We’ve come pretty far, having passed (maybe mostly) through the fog of financial crisis,” he writes in his foreword. Given that three members of the G7 have spent the past few weeks fighting off the implosion of the Euro it seems that the financial crisis has ‘mostly maybe’ passed rather than ‘maybe mostly’. Worse, even if the Eurozone does avoid meltdown that does not mean good news for aid.

When the DATA report warns of “a new debt crisis” round the corner, you have to wonder whether it’s talking about the rich or the poor world, or, indeed, both. The public debt of the donor countries has spiralled during the current economic crisis and with taxpayers on a fiscal crash diet it’s hard to see even current levels of generosity to the needy abroad being sustained.

The tragic irony, of course, is that evidence is filtering through that the aid splurge of the past five years may have started to achieve something. Two hundred million bednets have been distributed since 2006, cutting deaths from malaria by half in some African countries. The number of people with HIV in Africa receiving anti-retroviral drugs has gone up from 100,000 in 2003 to 3 million today. Another 42 million kids are enrolled in school. But that evidence is unlikely to have much of an impact on governments pondering whether to cut spending on things that directly benefit their own voters to pay for aid to non-voters in other countries.

Like it or not, we have to find new ways of making the aid money go further and find new ways of financing development that do not depend on the political will of a few rich countries. Philanthrocapitalism, by tapping the expertise, creatvity, money and other resources of the private sector, has to be central to a new development strategy. First, to pilot and test ideas to make aid smarter and more effective. Second, to leverage more private capital – full for-profit, ethical investment and donations – to fill the gap.

As we have argued before, this means thinking about aid not as the exclusive preserve of government but as a partnership with philanthrocapitalists, rich and less rich alike. This challenge is urgent and the rich countries are being slow to take it up – Britain’s new government, in particular, seems set on business as usual (although there are plenty of disgruntled voices on the right who would like to see an axe taken to the aid budget).

Yet there are some tentative signs that things are starting to change. Women’s Ministers from the Commonwealth countries will be looking at philanthrocapitalism as part of their meeting next month (where Michael will be speaking) on putting gender equity at the top of the development agenda. And new USAID Administrator and Gates Foundation veteran Raj Shah will be charged with building more partnerships with private organisations, if a recent leaked strategy document is to be believed, which it should be.

As he recuperates and ponders the last five years, Bono can take pride in the way he has pushed governments to increase what they spend on aid. He may shed a tear for the passing of that era but something new is now needed. Hopefully he will soon find what he’s looking for.