27 May 2005

Official aid figures make the world’s richest countries appear three times as generous as they really are, ActionAid claimed today.

In a report which calls for sweeping reform of the international aid system, the charity says that the G7 countries exaggerate the real value of their aid by including extravagant spending on such items as technical assistance and administration, and by double-counting debt relief.

ActionAid calculates that only one third of G7 official aid in 2003 was 'real' aid. The rest was 'phantom' aid which may have achieved other goals, but did not help to fight poverty. The least generous countries also have the least enlightened aid policies. Only 10 cents of every dollar of US aid is 'real' aid. The UK, with 71% 'real' aid, is the G7’s best performer. But Luxembourg, Norway and Denmark, none of them G7 members, give far more aid relative to their wealth, and a high proportion of it – 81% in Luxembourg’s case – is 'real'.

Patrick Watt, senior policy officer at ActionAid, said: "Among G7 countries the UK is the best when it comes to the proportion of its aid that really helps poor people. But the UK still spends too much on expensive consultants and administration, and it inflates its aid figures by including debt relief. The UK needs to increase its aid to the 0.7% target by 2010 at the latest, and make sure that 100% of it is ‘real’."

Six of the seven countries agreed in 1970 to spend 0.7% of their income on aid. The report shows that the G7’s “real” aid still amounts to only 0.07% of income.

"`Real’ aid does real good, and we need much more of it,” said ActionAid policy officer Romilly Greenhill. “The UN target is for donor countries to expend 0.7% of their income on aid, but shamefully the G7 are only one tenth of the way to that target when it comes to ‘real’ aid. If donors really want their aid to help people, they need to reach the ‘real’ 0.7% target by 2010 at the latest."

Researchers worked with ActionAid offices in Cambodia, Ethiopia, Uganda and Vietnam to observe how aid is spent. In Cambodia, they found that the cost of 740 international advisors was $50-70 million, almost as much as the wage bill for the country’s entire civil service of 160,000 people. But there were also examples of 'real' aid working for poor people. Well-coordinated aid helped Uganda to increase primary school enrolment by five million.

The report – Real Aid: An Agenda for Making Aid Work - argues that donors are not meeting 'real' aid targets because they are not held accountable for the quality or quantity of their aid. ActionAid recommends a new international aid agreement to ensure a fairer balance of power between donors and recipients and to hold both sides to account for using aid to benefit the poor. A UN commissioner for aid would be the ultimate arbiter.