Aid for profit undermines development

December 5, 2016

by IBON Foundation

Official development aid (ODA) is increasingly becoming a tool to support private profits rather than people-centered development. This indicates the persistence of the neoliberal ways that prevent aid from meaningfully contributing to national development.

The Second High-Level Meeting of the Global Partnership for Effective Development Cooperation (GPEDC) recently held in Nairobi, Kenya, concluded with a resolution to “foster enabling policy environments for the business sector”. This policy direction means that more and more of ODA at the center of development cooperation will go to support private profits. This directly contradicts how aid is supposedly for development.

The Nairobi high-level meeting on November 28-December 1, 2016 was attended by heads of state, ministers and high representatives of developing and developed countries, heads of multilateral and bilateral development agencies, international financial institutions (IFIs), parliamentarians, the business sector, and civil society organizations (CSOs). IBON Foundation was among CSOs attending. The GPEDC takes up the status and direction of the global aid architecture.

The increasing involvement of the profit-seeking private sector was prominent in the Nairobi meeting. In particular, aid was proposed to be used to “catalyze” big corporations to invest in infrastructure and other business projects in developing countries. This use of public funds to support private profits is justified as helping achieve the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development.

This distortion of the aid system is the latest symptom of neoliberal trends in the global ODA system. In the 1980s, IFIs like the International Monetary Fund (IMF) and World Bank used ODA to force neoliberal policies on underdeveloped countries. These disabled recipient governments’ means to independently define their nation’s course of economic development on one hand and allowed market forces to prevail on the other.

Today, increasing portions of aid are going to support private profits especially of large corporate interests. In the Philippines this includes using aid to facilitate big-ticket public-private partnerships (PPP). For instance the United States Agency for International Development (USAID) and Japan International Cooperation Agency (JICA) are involved in designing power, water and flood control projects in the country. Similar efforts in the past have created profitable opportunities for US and Japanese firms, contractors and consultants.

International development cooperation should be about development and improving the lives of people, not supporting private profits. The global ODA system remains flawed and efforts to ensure that this genuinely addresses poverty and inequality remain urgent. ###