African Development for the Completely Bloody Ignorant

We’ve reviewed the proposals of the UN Millennium Project, the top-level think-tank set up by Jeffrey Sachs and Kofi Annan to recommend ways for the world to meet the Millennium Development Goals. Like Sachs’ personal plan for ending poverty by 2025, it’s a considerable shopping-list of investments and reforms to be heavily supported by rich-country aid. So let’s get down to the nitty-gritty and see how much it will all cost - and why the Project believe it’s worth it.

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To calculate the aid needed to achieve the goals, of course, breaks down into two calculations: the total cost of the project, minus the level of extra spending poor countries can afford to provide themselves. The report recommends a detailed assessment process for each country to calculate its needs and ability to spend, so a hard-and-fast number wouldn’t be available until that process was complete. However, to get a sense of it, the Project worked with local organisations to come up with “needs assessments” for five countries including, most usefully for our purposes, Ghana. The basic costs for all low-income countries studied were similar, although the balance of different spending priorities differs. Here’s a detailed look at Ghana’s plan. (p56)

You can click for a larger view. As you can see, education and health are the main investment priorities, closely followed by energy and transport infrastructure. In terms of funding, the level of aid required (bottom row) increases consistently up to 2015. Note, however, that the level of funding from Ghanaian households and the government also increases. In fact, the report estimates governments will be able to spend 4% more of GDP - that’s a considerable increase in government budgets - on investments to meet the goals by 2015. This would be met by new taxes and re-directing current low-priority spending. So this isn’t a free lunch.

What do these calculations translate into at global level?

The report - which was published in early 2005 - estimates that financing every low-income country to meet the MDG’s would cost $73 billion in 2006, with annual spending rising to $135 billion by 2015. However, there are a host of other costs: $10 billion to support middle-income countries like Brazil and India, spending on staffing and running aid agencies, debt relief, etc. In total, the cost of meeting the MDG’s everywhere is for $121 billion in 2006, with annual payments rising to $189 billion in 2015. The table below shows the costs laid out.

So that’s the amount of aid needed, right? Well, not quite. Some existing aid can be “reprogrammed” to meet the MDG’s, which takes a bit off the figure; but equally, some existing aid needs to be maintained that isn’t strictly goal-related. What’s more, to help all low-income countries to meet the goals won’t be possible; governments that don’t show the necessary planning, and commitment to democracy and human rights, won’t be eligible for help.

With these adjustments, we get a final figure of $135 billion in 2006, with annual spending rising to $195 billion in 2015. As the table below shows, this is substantially more than the current levels promised when the report was published. (p57)

So what does this work out as, in real money? Well, it’s between 0.44 and 0.54% of rich countries’ GNP. So this is still short of the 0.7% of GNP we’ve been promising for aid for around thirty years. To put it another way, it’s around double the current level of aid. This roughly chimes with the report of the Commission for Africa, who proposed providing another £25 billion (around $50 billion) of extra aid now and more after 2010.

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Of course, this doesn’t mean donors don’t have to reach 0.7%. The table above doesn’t include many things currently receiving major aid, such as spending in countries of geopolitical importance, like Afghanistan and Iraq. To accommodate that spending on top of the MDG spending would probably need aid of 0.7% rich-country GDP by 2015.

Since the 0.7% target was agreed in 1970, it has been reaffirmed several times, most recently in 2003. But so far, only five countries -Denmark, Luxembourg, Netherlands, Norway and Sweden - have reached the target. Several other countries, including Britain, have timetables to meet it by 2015. But the US, which because of its vast economy would account for almost half of the total extra aid needed, is currently at less than 0.2%. The report endorses Gordon Brown’s plan for an International Finance Facility to front-load aid by issuing bonds based on donor commitments. In other words, bonds are sold on the market that give the buyer the right to receive future aid, and the money raised can be given right away to poor countries.

The benefits of meeting the goals

Is it worth it? The report certainly thinks so. Meeting the goals means a host of changes of great benefit to the world’s poorest people:

• 300 million more people lifted out of poverty between now and 2015 than on current trends; In Africa, 150 million people lifted out of poverty, as opposed to an increase of 75 million in the number of extremely poor people under current trends
• 230 million fewer people undernourished than on current trends; in Africa, 75 million fewer; as opposed to 25 million more on current trends
• 3.4 million fewer children dying each year, the benefits seen almost entirely in Africa

HIV infections, deaths in pregnancy and childbirth, slums, and poor sanitation would all be reduced. Plus, the report notes, millions of people, particularly women and girls, would have increased rights and opportunities, and the environment would be better protected. (p60-62)

What’s more, the goals are a step on the way to eliminating extreme poverty altogether. If countries maintain 0.7% GNP aid after 2015, the report argues, extreme poverty can be “substantially eliminated” by 2025. Here the report is unsurprisingly in agreement with the Project’s director, Jeffrey Sachs. (p60)

In addition, the report argues, there are security benefits to achieving the goals. Poverty is linked to state failure, conflict, excess migration and other causes of instability. And, the report argues, poor countries’ faith in the international system - already impaired by previous broken promises on aid - will be lost entirely if the goals aren’t supported. “If we do not act now,” it says portentously, “the world will live without goals.” (p64)

So that brings to an end our long trawl through the poverty proposals of Jeffrey Sachs and the UN Millennium Project. I’ll prepare a quick one-post summary of the key points for reference. Then, we’ll look at some of the critics of Sachs’ proposals, and what it is they dislike.

There’s a section in the UN Millennium Project Report entitled “Getting started in 2005 - launching a decade of bold ambition”. The first few sentences make depressing reading. “There is still enough time to meet the Millennium Development Goals - though barely,” it notes. “Without a bold breakthrough in the coming year, a large number of countries that could still achieve the goals will be consigned to failure.” (p50)

Oh dear. Indeed, for all the celebrations that met 2005’s historic aid pledges by the G8 at Gleneagles, Scotland, the truth is that a serious bid to meet the goals has not yet begun. The extra aid promised has yet to materialise. It seems likely, therefore, that the MDG’s won’t be met everywhere by the agreed deadline, 2015.

And yet, the goals remain the most comprehensive and internationally supported development framework ever agreed (though they certainly have their critics). So even if 2015 is unachievable, aiming for 2017 seems better than giving up. So let’s pretend that, a little behind schedule, the world is now eager and ready to fund and support the UNMP’s recommendations. Where do we start?

1. Every developing country that wants to be eligible for support should prepare an MDG-focussed poverty reduction strategy, a plan to achieve the goals complete with precise costings and measurements of the aid required.
2. Fast-track countries, that are most suitable to receive support, should be identified (more on this below).
3. International agencies should immediately begin working with poor countries to train thousands of teachers, doctors, planning professionals, engineers, and “village specialists” in health, agriculture, forestry, road maintenance and other basic skills. This is to ensure that once infrastructure projects such as new schools and hospitals begin, they aren’t messed up by lack of staff, as has often been the case in the past.
4. The “quick wins“, cheap interventions proven to be effective, should be implemented in all as widely as possible. It would take just two years, the report argues, to distribute anti-malaria bed nets to all at-risk African children.
5. Middle-income countries like China and South Africa, while they have their own poverty issues, should also be invited to join the coalition working towards the goals for poor countries. While their ability to contribute financially may be limited, they can offer expertise, training and certain key cheap materials - for example, China produces artemisinin, a key ingredient of anti-malaria medicine. (p50-55)

But for many rich-country observers, point 2 is the key obstacle. With so many poor countries, with widely varying standards of government, and different needs, how can we identify those best suited to receive extensive support straight away?

Fortunately, the report notes, someone has beaten us to it. In fact, five separate systems have recently assessed poor countries’ governance and economic policies according to fairly strict standards. They are:

• The Heavily Indebted Poor Countries Initiative, the major debt relief system launched in the late 1990s;
• The US’ Millennium Challenge Account, an aid initiative launched by the Bush administration;
• The African Peer Review Mechanism, in which African countries submit their policies and governance to review by other African countries;
• The poverty reduction strategy process itself. Although a true process for assessing MDG-focussed poverty plans is yet to be put in place, countries’ existing PRSP’s are assessed by the World Bank and IMF, and several have recently been praised for their quality and comprehensiveness.
• and a recent World Bank study identified 18 countries that have good policies and a history of using aid well, and development needs that could see them absorb another $30 billion in aid. (p51-52)

Of these systems, the Millennium Challenge has some of the highest standards , with just 19 of Africa’s 54 countries having so far qualified, including Ghana, Mozambique and Niger. HIPC has been similarly strict, with 19 African countries having completed the process of qualification and a further eight having begun the process. All in all, the report argues, reviews of these assessment mechanisms would bring up a list of “at least a dozen” countries eligible for immediate fast-track support, with Senegal and Tanzania likely to be included. (p50)

So, by identifying these countries and getting immediately started with investment and training, and by encouraging poor countries to prepare detailed plans for meeting the MDG’s, it’s still possible, the report argues, to get the process off to a flying start.

Finally, next time, we’ll remind ourselves of the argument for taking the steps necessary to meet the goals.

A sort of global brain trust established by Kofi Annan to tell the world how to meet the Millennium Development Goals, the Millennium Project proposes major investments in infrastructure and social programmes in poor countries, funded largely by rich-country aid, and reforms to the international trade system. But it also calls for co-operation between rich and poor countries in another area - “global and regional public goods.”

What on earth does this mean? Well, “public goods” are goods which can’t be limited to one person. Clean air is a public good, as are roads. Because they can’t be controlled in that way, they can’t be sold for profit, which is why they tend to be looked after by governments out of tax money. But what about public goods that cross country boundaries? The UNMP argues we need to look again at our strategies for investing in and protecting those. (p47-8)

Regional public goods

Take for example regional infrastructure. For many land-locked African countries, the only access for goods to ports for export comes through other countries. If a country invests in improving its roads, but the countries lying between them and the port don’t make matching investments, little is gained. For maximum effectiveness, transport projects need to be co-ordinated between countries.

Perhaps most seriously, environmental issues tend to ignore country boundaries. (This is especially true in Africa, where country boundaries stem from age-old colonial decisions and bear little resemblance to natural barriers such as rivers and the edges of forests or deserts.) One country’s over-farming could lead to “desertification” of land, for example, which could easily spread to neighbouring countries. Also, conflicts in one country can easily spread to surrounding countries, or destabilise them through massive refugee flows. (The Second Congo War, which cost around 4 million lives in the late 1990s, was started largely by disruption from the Rwandan genocide of 1994.)

To better tackle all these issues at a regional level, the report calls for regional co-ordination to be built into country strategies to achieve the MDGs. Poverty reduction plans should include plans for regional co-operation in four areas: transport, water and energy infrastructure; environment; economic policy harmonisation; and political dialogue and transparency along the model of the African Peer Review Mechanism, where African countries share submit their governance for review by neighbours.

In addition, the report calls for increased funding by rich countries for regional organisations. Africa has a range of these, including the Economic Community of West African States (ECOWAS) and the Southern African Development Community (SADC).

But what about global public goods? The report focuses on two: global scientific knowledge, and the environment.

Global science

Scientific advancements in fighting disease, generating energy, agriculture and so on benefit all of humanity and can massively help the development of poor countries. (For example, scientific research into improvements in agricultural production - creating hybrid, sturdier breeds of rice - brought about the “Green Revolution” that has saved millions from starvation in Asia and kickstarted the region’s economic growth.) But such advancements require vast expenditure on research, usually funded by governments (although the Green Revolution research was in fact mostly funded by nonprofits, the Ford and Rockefeller Foundations). In practice, this means the vast majority of basic scientific research is funded by rich country governments, and naturally largely focuses on rich-country problems. For example, the WHO believes $4 billion a year is needed to combat malaria; the current funding is around $300 million. (full report, p229)

Now, the report argues, a two-pronged approach must remedy this. First, rich countries should devote more attention to poor-country problems, like sexual and maternal health, when funding scientific research. $7 billion of extra funding each year should be put forward by rich countries to research agriculture, energy, and climate change. At the same time, rich countries should support scientific research in poor countries by increasing funding for universities. (overview report, p49)

The global environment

While issues like desertification are regional, climate change is global. It stands to worsen the situation of poor countries through increasing droughts, floods, and tropical diseases. And yet, the primary responsibility for solving it must lie with the rich and middle-income countries that have largely created it. The report calls for rich countries to take immediate steps to stabilise and reduce carbon emmissions, and develop carbon “sinks” such as increased forest space to help stabilise the level of carbon in the atmosphere (although the report stops short of detailed proposals, which would probably fill at least another 400-page report).

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The report’s proposals in this section are fairly uncontroversial, but nevertheless significant. I’d like to have seen more robust proposals for regional cooperation, as African governments in particular are notoriously bad at it. While increased funding for regional organisations can work when the will is there, too often it’s lacking, leaving some countries punished for others’ short-sightedness.

We’ve now looked over most of the UNMP’s shopping-list of investments and changes needed to achieve the Millennium Development Goals. But this is a whopping ten-year plan. How to get started? Next time we’ll look quickly at the report’s scheme to put the world on the right path.

One of the most common arguments you hear against increasing aid to Africa can be summed up in a single slogan: “trade, not aid”. It’s by trading with other countries, the argument goes, that formerly poor countries in Asia have transformed their economies and slashed poverty. Simply supplying more aid might help keep people alive, but not give put countries on the long-term path out of poverty.

It’s certainly true that international trade has worked well for Asia. China and India have seen millions lifted out of poverty since they opened up their economies in the late 1970s and 1990s respectively. But the UN Millennium Project argue, in their 2004 report on strategies to meet the Millennium Development Goals, that the idea that trade and aid are somehow opposed is a myth, and “the slogan ‘trade, not aid’ is misguided.” (p46)

Instead, the report argues, trade reforms go alongside investment and social programs, funded by aid, in helping poor countries meet the Goals. We’ve already looked at the report’s investment plans, so now let’s see its recommendations for reforming the way international trade is carried out.

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We’ve seen the recommendations of the UN Millennium Project, the coven of experts led by Jeffrey Sachs tasked with advising the world how to meet the Millennium Development Goals, for the investments and reforms poor countries need to make to meet the goals. But what about rich countries? How does the international system of aid and trade need to change to make the goals possible?

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We’ve already looked at how Professor Jeffrey Sachs believes small, proven interventions at local level can be “scaled up” - accompanied, of course, by a matching scale-up of aid to pay for it all. What does his UN assignment, the UN Millennium Project, have to say on the topic?

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The UN Millennium Report proposes each country prepare a detailed shopping-list of interventions, from education and health to environmental protection, to achieve the Millennium Development Goals. But what kinds of interventions do they have in mind? The report outlines a host of “quick wins” - comparatively cheap, highly effective investments that could be effective in most developing countries - that give us a good sense of what later investments could entail.

Here are some examples:

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The UN Millennium Project, a sort of specially-convened think tank put together by Kofi Annan to report on how the world can meet the Millennium Development Goals, often suggests very similar proposals to its director, Jeffrey Sachs, and his book The End of Poverty. I’m choosing, in the absence of evidence to the contrary, to assume that this is because Sachs’ own thoughts have been informed by the hundreds of experts consulted by the UNMP’s numerous task forces, and not because Sachs himself had undue influence over the project’s Report. Certainly, one of the areas where they both share the most common ground is in their proposals for country-level plans to achieve the MDGs. (more…)

We’ve looked in detail at Jeffrey Sachs‘ proposals for massive increases in aid to Africa, and developing countries elsewhere, in a bid to end extreme poverty by 2025. We’ve also looked at the Millennium Villages project, Sachs’ bid to prove the effectiveness of aid at a local level. But Sachs isn’t only known for his personal advocacy and that of his department at Columbia University, the Earth Institute. He was also director the UN Millennium Project, a side-arm of the UN Development Programme, the UN’s main development-focussed organisation. Their report offers a detailed look at the practicalities of Sachs’ plan. (more…)

Over the last few weeks (and months) we’ve gone on a bit of an odyssey through Jeffrey Sachs’ The End of Poverty and found out how the man the New York Times calls “probably the world’s most important economist” believes that with carefully targeted interventions in health, education and agriculture, along with reform of governance and of trade rules, we could end extreme poverty by 2025. We’ve seen how he thinks it should be done, how it should be run, and how it should be paid for. Finally, let’s remind ourselves of why he believes we must take action - and how the obstacles of political inertia in the US can be overcome.

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After some introductory economics lessons and a bit of autobiography, we’ve finally got through Jeffrey Sachs’ plan for eliminating poverty by 2025. Now it’s time to answer the key question: go on then, how much?

The short answer: $135bn a year - as opposed to the $65bn/yr currently being spent - now, rising to $195bn a year by 2015. After that, we’ll see. In other words, we need to double aid for a while, then add the same amount on again. That’s for the whole of the developing world, not just Africa. This amounts to around 0.5% of GDP, still less than the 0.7% we’ve been promising for thirty years. We should put the rest in, too, to have something aside for when climate change starts to bite.

There, that’s the short answer. ADHD sufferers, sod off now.

Still with me? Good. It’s worth going into a bit more detail. Beware: there will be numbers. (more…)

Last time, we saw how Jeffrey Sachs outlines the case for greater investment through aid in developing countries: how, he argues, an increase in six different kinds of capital - human, business, infrastructure, the environment, public institutions, and knowledge - can make the difference between an economy growing out of poverty, and one sinking ever further in. Now, let’s see exactly what mechanisms he believes will enable us to manage this almighty aid effort. (more…)

After a detour to the Millennium Villages, we’re now in the final stages of our long hop, skip and jump through The End of Poverty, the ambitious blueprint for eliminating extreme poverty by Professor Jeffrey Sachs. Last time, we looked at the on-the-ground investments in things like fertiliser which Sachs argues can transform lives in rural villages relatively cheaply - and which he’s testing out in the Millennium Villages. Now, let’s see how he believes this approach works when applied at a global scale. (more…)

Earlier, we looked at some of the criticisms of Jeffrey Sachs‘ Millennium Villages Project. Now, let’s see if they stand up. (more…)

Last time - what seems like months ago, apologies for the delay - we looked at Jeffrey Sachs‘ Millennium Villages, a set of 12 village-clusters across Africa where extensive aid is funding targeted packages of interventions in health, education and agriculture. Sachs believes that the programme can see villages progress from heavy reliance on aid to self-reliance, and plans to expand the scheme to 100,000 villages.

And on looking at the figures, they seem a roaring success, with impressive achievements in crop yields and health outcomes. Yet the project has met with strong criticism. (more…)

Last time, our whirlwind tour of Professor Jeffrey Sachs’ The End of Poverty took us to Africa and his explanation of the relatively cheap, simple on-the-ground investments which he argues offer hope for the end of extreme poverty by 2025. Next, we’ll zoom out and look at his proposals at the national and global scale. But first, we should look at the local level in a bit more detail. Sachs doesn’t just write articles and give speeches, though he does that a lot. With the help of two organisations he also runs - the Earth Institute and the UN Millennium Project - he’s trying the approach out in villages across the northern part of sub-Saharan Africa. They’re called the Millennium Villages, and they give us a great opportunity to see if Sachs’ proposals really work. (more…)

We are, it seems. As you may have noticed the author of The End of Poverty, Director of the Earth Institute and all-round celebrity economist recently served as the BBCs’ 2007 Reith lecturer. These annual lectures are the jewel in the crown of the beeb’s public-service current affairs broadcasting, so it’s quite a big deal. Better still, each lecture is followed by questions and answers, meaning you get to hear Sachs responding to some of the criticisms commonly put forward about his ideas. (more…)

Or “on the ground”, to use Professor Sachs‘ own choice of cliche. Having sketched out human economic history, the causes of poverty and his own history of economic fiddling, the director of the Earth Institute and author of The End of Poverty devotes its final few chapters to a detailed analysis of the steps sufficient to, in his view, end extreme poverty by 2025, starting by achieving the millennium development goal of halving it by 2015. He starts by looking at the interventions at local level that can turn poverty around. (more…)

The report of the Commission for Africa, summarised here and more heavily here, is an ambitious and sophisticated analysis of the problems plaguing Africa and the steps needed to solve them. But it isn’t without critics. Last time, I looked at those who criticised the Commission for being too conservative in its calls for Western action and in its criticisms of the role of rich countries and corporations in Africa. This time, let’s look at the other side: those who criticise the report for going too far in those same directions. You could call this the “right-wing” criticism, because its central point is that the Commission doesn’t put enough faith in markets. This is the view of a large number mainstream economists. (more…)

The report of the Commission for Africa, the brain trust of African and other leaders, economists and thinkers set up by Tony Blair, became one of the highest-profile “packages” of solutions for African put forward in 2005, during the Make Poverty History campaign in the leadup to the G8 summit in Gleneagles. We’ve summarised its findings at length, and at a little less length. Its program is heavily evidenced, and comprehensive. But I didn’t want to pretend there haven’t been criticisms of it, because there have. (more…)