Today was my first day working for ActionAid and I arrived just in time to attend the launch of the European Commission’s new development policy – the so-called ‘Agenda for Change’.
The event attracted a large crowd, ranging from diplomats representing developing countries to development NGOs. They all seemed to agree that the EC’s policy needs to change but some areas of the policy attracted heavy criticism.
Under the new policy unveiled by Commissioner Piebalgs, the way in which development aid is allocated will change. At its heart is a focus on promoting economic growth as a means of reducing poverty.
The thinking behind this is that the benefits of economic growth will trickle down to the poorest people in society, reducing poverty. But the reality is that this approach has been tried before but failed – so why should it be any different this time?
This is what participants at today’s consultation were asking Development Commissioner Piebalgs. Many were keen to know which countries stand to receive more aid and which will receive less and how soon the cuts will take place. Decisions that the Commission will announce in the coming months.
We were also keen to show that growth alone is not sufficient to reduce poverty and inequality. Evidence shows that despite high economic growth in many developing countries, global poverty levels have not fallen and the gap between rich and poor is getting bigger. This makes the Commission’s proposal to stop providing aid to Middle Income Countries even more alarming.
Whilst we agree with the Commissioner that aid should be focused on the world’s poorest people, this shouldn’t mean withdrawing aid from countries such as Ghana, Guatemala and Zambia – where inequalities are massive and the benefits of recent growth are not reaching the poor.
But where EU aid is spent is not the only thing that is set to change. In an alarming policy shift, aid money will now be channelled into private sector investments.
This may not seem too alarming but scratch below the surface and many questions remain. Is this money going to go to support local companies in developing countries who can provide an income for poor people or will it go to large European companies?
Our research shows that the cost of building a kilometre of road in Ghana or Viet Nam falls by 30-40% when it is built by a local company. But today more than two-thirds of bilateral contracts are still going to companies from donor countries – so this needs to change.
The European Commission also needs to make sure that its development policy successes are not compromised by other policies such as agriculture, energy and trade.
This needs to be tackled at the highest level, with President Barroso working with Commissioner Piebalgs and others to make sure that EU policies don’t compromise peoples’ rights and that there is a system in place to ensure that incoherencies in EU policies can be brought to light.