Development Aid

When the Numbers Mean Nothing

  • Why it matters

    Why it matters

    Germany spent more on official development assistance, or ODA, in 2016, by including domestic spending on refugees inside the country. Critics say that while the numbers look good, more could be done to ensure that aid goals are being met.

  • Facts

    Facts

    • In 2016, Germany increased its ODA to developing countries by 36 percent to €22 billion, or $23 billion.
    • The main reason for the significant increase is that Germany has begun classifying its domestic spending on refugees as ODA. Until 2014, Germany did not include this expenditure in calculations. Other European Union countries, such as Sweden and Britain, have long done this.
    • In 2016, total ODA from developed countries reached a new peak of $142.6 billion, an increase of 8.9 percent compared to 2015.
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    Audio

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Man braiding a basket
In Ghana: All that aid money has brought little in the way of positive change in the global fight against poverty. Source: Getty

It took 44 years – but during the past year Germany finally managed to make the quota set by the United Nations in 1972, spending 0.7 percent of economic output on development aid. Yes, the goal was only reached thanks to all the spending on refugees inside Germany; without them, the quota would have been stuck at 0.52 percent.

But there is nothing reprehensible about including these costs in the calculation, despite claims to the contrary from some aid workers. It is justifiable. It corresponds to criteria governing the quota for official development assistance, or ODA, which other industrial nations have adhered to for years.

 

The ODA quota applied up until now is no longer fit for purpose, and the UN should abolish it.

The ODA quota shows that Germany can spend money to help improve living conditions in poorer countries. But the government should not be too quick to congratulate itself. Because the sums which add up to total expenditure say nothing about the quality of that aid given.

On the contrary, in fact. The experience of the last few decades has only shown that all that money has brought little in the way of positive change in the global fight against poverty. Where war and corrupt regimes are the norm, good intentions and the funding that comes with them has all too often exacerbated the situation, stabilizing those third world elites which exploit their country.

That is why since last year the world community has tended to promote private investment by the business sector, in partnership with civil society, rather than have the rich simply dole out alms to the poor. This is the basis on which the UN works and the G20, under the German presidency, is trying hard to do the same.

This change of policy is sensible. The ODA quota applied up until now is no longer fit for purpose, and the UN should abolish it.

Large amounts of money only help in acute emergency situations, for example, in the case of famines or post-war reconstruction. Whether a poor country is able to develop economically or not, is not contingent on the amount of development aid it receives.

If that were true then Ghana would be at least as well off today as South Korea. In 1960, the two countries boasted similar economic performance.

And it is just as inappropriate to use the ODA quota as an argument against spending a higher percentage on NATO. The objective is to increase military spending to 2 percent of German GDP by 2024.

Elections are coming up and Germany’s foreign minister, Sigmar Gabriel, a member of the Social Democrats, wants to use his role to paint a black and white picture, in which the US finances “bad” military spending while Germany stabilizes the world with “good” development aid.

Quite simply, this is shirking responsibility: The US is justified in its demands that it cannot be the sole guarantor of security for all members of the trans-Atlantic military alliance for all eternity.

 

To contact the author: riedel@handelsblatt.com

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