Comments

Hi DJ Konz - I suspect (and I admit this is purely speculation on my part) that a big part of the reluctance to establish a Department for International Development in Australia is the desire to keep the aid program closely aligned to the foreign affairs portfolio - the Security Council agenda in particular. Elevating AusAID to a Department would move the Agency away from DFAT's influence. AusAID's ability to quickly bring 'resources' to the table (in the form of projects or programs) as nascent diplomatic relationships are formed is an extremely useful asset for DFAT. Of course this only holds as long as the pursuit of Security Council status is an overriding foreign policy objective. It remains to be seen if the new Minister for Foreign Affairs sees it as such.

It’s worth knowing more about the International Fund for Agricultural Development (IFAD) in three important areas. The first is the United Nations Convention to Combat Desertification (UNCCD). As a subsidiary body of the UNCCD, the Global Mechanism (GM - http://www.global-mechanism.org/en/About-Us/Who-we-are) supports developing countries to position land as an investment priority at the national and international levels. In addition, the GM provides countries with specialised advice on accessing finance for sustainable land management from a range of public and private sources, both domestic and international. IFAD has hosted the GM (http://www.ifad.org/partners/gm/index.htm) since its beginning in 1998. The second is IFAD’s support for microfinance – very small loans to the poorest of our world’s poor. According to the 2012 State of the Microcredit Summit Campaign Report, over the last 13 years, the number of very poor families with a microloan has grown more than 18-fold from 7.6 million in 1997 to 137.5 million in 2010. Assuming an average of five persons per family, these 137.5 million microloans affected more than 687 million family members, which is greater than the combined populations of the European Union and Russia. The third is IFAD in Afghanistan. Currently, IFAD has a limited presence in Afghanistan, with its “Rural Microfinance and Livestock Support Program”, which seeks to improve the livestock sector and generate income for poor rural households. IFAD has noted that poverty in Afghanistan is closely related to: • the high illiteracy rate in rural areas, where 90 per cent of women and 63 per cent of men are unable to read or write; • rural people’s dependance on livestock and agricultural activities for at least part of their income; • inadequate land ownership and access to land; • lack of irrigation infrastructure. The poorest rural people include small-scale farmers and herders, landless people and women who are heads of households. There are an estimated 1 million Afghan widows. Their average age is 35, and 90 per cent of them have an average of four or more children. Without the protection of a husband, widows suffer from social exclusion in Afghanistan’s patriarchal society. Many widows have no choice but to become beggars. Children aged five or under are the most vulnerable segment of Afghan society. As many as 50 per cent of them suffer from chronic malnutrition. A great promise remains to be fulfilled from the 1990 World Summit for Children in New York - putting children first for resources. The nations in Afghanistan must leave Afghanistan a better place for its men, women and children.

Thanks David for your comment. 1. No, tied aid and aid-for trade are not the same thing, but they are not mutually exclusive if the provision of aid is contingent on the sale of goods and services in the donor country. The controversy in Britain was that the Development Secretary suggested that aid to India was also intended to secure a trade deal - the sale of Typhoon - which is against Britain’s official policy stance. 2. Britain’s aid program to India is intended to be on poverty reduction in accordance with the government’s International Development Act 2002. As part of Britain’s new program, the largest portion of Britain’s aid to India (£341m) goes towards wealth creation, particularly ensuring women to have access to savings, credit and insurance. 3. Sumner’s argument is that most of the world’s 960 million poor live in stable, non-fragile middle-income-countries. Both Nigeria and Pakistan recently graduated from the World Bank’s low-income-country classification to a middle-income-country, although yes I agree with you that they are certainly not stable, and not part of the grouping that Sumner is referring to.

Prof Howes mentions the Aid Review's recommendation of a ministerial post for International Development, or at least the explicit appending of 'International Development' to the Foreign Affairs portfolio. A Minister for International Development is a move that many in the development community would support and indeed see as long overdue. The Government's reticence to establish such a portfolio seems to be at least in part from electoral nervousness and timidity about its commitment -ostensibly with bi-partisan support - to increasing foreign aid spending in a context of 'fiscal constraint and aid scepticism'. One observation of Kevin Rudd's time as foreign minister, was that although he was as Prof Howes rightly points out, a strong advocate for Australia's aid program, that seemed rarely to translate into sustained public (eg media) championing of Australian aid. It could be argued that the government felt politically vulnerable to a withdrawal of bipartisan support and therefore did not confidently champion Australian aid to the nation - more a 'don't mention the war!' approach. While perhaps intended to protect the aid program as an expenditure domain from too much public or political scrutiny in fiscally challenging times, it has potentially made it more vulnerable, as many Australians are'nt aware of its many achievements in recent years. There is a place for honest and transparent public discourse about the program's shortcomings, as Prof Howes makes abundantly clear. But that discourse should be within a broader acknowledgement of what is good and improving in the program - 15% fail rates means 85% of projects aren't failing. While this needs to drastically improve, and despite its legitimate criticisms, Australian aid is saving and improving lives. Sadly, few Australians understand to what extent that is the case. Perhaps there is an opportunity for Senator Carr to be a very public, if warts-and-all-honest champion and advocate for what is being achieved through Australian aid. Very public leadership of Australia's aid program, such as that seen under Gordon Brown and now Andrew Mitchell and David Cameron in the UK, can strengthen public support, and thereby create a more confident space for honest but constructive critique and development of our international development program. Hiding the light - and the dark, embarrassing bits - of Australian development assistance under a political bushel is not in the interests of the Australian people, or those assisted by our (God-willing) expanding and improving program.

I am a little ambivalent about the identification of remittance as an advantage on which to base a development strategy. First of all this will involve a paradigm shift in a few countries. The existing thinking is that development serves to lessen migration, to keep the maximum number of people in place. A remittance-based development strategy on the other hand involves the active encouragement of migration. In reality given the chance to move people do seek better economic opportunity, but from there to set up positive government policy to encourage movement is another matter. There are internal issues but also issues with the receiving countries. More likely than not the receiving countries would object or come under internal political pressure to so so, claiming strain on their own social services. So the World Bank should be careful about promoting that as a development strategy.

Three points: 1. Tied aid is not the same as aid-for-trade. Tied aid must be spent on good and services from the donor country. UK aid is not tied. 2. When you suggest that aid in India is linked to trade, do you have any evidence that it's not being spent on poverty reduction in the three target states? 3. There may be 960 million people living in middle income countries, but some of these countries are *certainly* not stable. Nigeria or Pakistan, for example.

The chance that the Australian Government would support a candidate with a development focus might be increased if the Australian representative on the Board of Governors were selected and briefed by an agency with a focus on combating poverty. This means the Australian Agency for International Development (AusAID) through the Department of Foreign Affairs, not the Department of the Treasury as is currently the case. This is now the practice in a number of countries including the UK (where responsibility lies with the Department for International Development) and Germany (the Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung).

For many years, the World Bank's approach to the region has not always been very clear, and in many of the countries it has had very little to no activity whatsoever (this is especially true in the northern islands). So I commend the Bank for its efforts to clarify its thinking on the Pacific. I agree that many of their observations serve to reaffirm what are already well recognized ideas and approaches for development in the region. I've yet to read the full paper, but from this summary it does appear that they've made a genuine effort to offer new "how to" approaches to some age-old challenges. Their discussion confirms the long-standing argument that when it comes to development in the Pacific, some degree of (cautious) "exceptionalism" is needed, especially in the smallest states where high "fixed-costs" and other endemic constraints are very real. But in the end, I totally agree with Paul that our own policies, institutions, and (let's be brutally honest!) quality of leadership are also major factors that add burden to an already difficult development situation. Yes, the islands face many real development challenges, but there's also much room for self-help and improvement.

I agree with you Paul. I don't recognise much that is new in the World Bank's approach. Pacific island countries and donors have long been discussing integration of transport and communication links, increased labour mobility, and regional approaches to regulation and public sector capacity in specialist areas like telecommunications, audit and statistics. The problem is not what needs to be done, it's how to reach agreement and then progress to implementation. The World Bank's 3rd prong, Maximising gains from natural resource industries, takes us back to the hardy perennials of governance, accountability and public sector capacity that have been the focus of aid programs for decades. Certainly innovative approaches to ensuring better outcomes from natural resources are needed and one such innovation in the World Bank's 4th prong is to increase the role of the private sector in delivering aid-financed goods and services. This suggestion draws on international experience over the past decade of the private sector in leveraging development outcomes. In the Pacific island region, there are many examples of private sector development activities that are delivering health, education and economic benefits. The private sector brings logistics, management skills and innovation to basic service delivery challenges and in the case of mining companies, can often reach remote and hard to access populations. But engaging the private sector in delivering goods and services also requires accountability and transparency. At present, it is difficult to tell from company reporting the extent or the cost of the services they deliver whether as part of a formal operating licence agreement or as a voluntary corporate social responsibility project. If donors in the Pacific were to move to having more partnerships with the private sector to deliver aid-financed goods and services, and they provided public reporting on the cost and effectiveness of these partnerships, this could pave the way for governments in the region to consider the private sector to supplement resources for delivering basic services.

Every country in which I have worked, and it is now close to 50, claims that it is "different". And of course, in a number of senses, each is correct. Each country has a unique history, culture, and institutions, which determine how people behave, the opportunities, and their policy choices. However, in another sense, many are depressingly similar. Policy actions and outdated institutions make achieving prosperity difficult. Most Pacific region countries simply do not have the fundamentals that effectively encourage private enterprise. Their policies do not promote investment or entrepreneurship. Many countries view business activity with suspicion and as something that needs to be controlled. Foreign investors have to have amazing persistence if they wish to invest. Yes, Pacific region countries are small and remote, but many of their actions amplify the disadvantages of size and distance. In turn, this makes many of them more dependent on aid, so a vicious circle is established. None of the suggestions in the "new" World Bank approach are are in fact new. What is needed, is not another initiative, but rather a renewed focus on fundamentals. Countries in the Pacific would do well to look at the example of Cape Verde for a small isolated country that has achieved high growth.

Thanks for the summary. Another point that stood out for me in the presentation, and which turns conventional thinking in the Bank on its head, is the claim that the public sectors of some (mainly micro) states will and should remain large relative to their economies. This focus on the “crowding in” effect of public spending contrasts with previous attempts to downsize the public sector of Pacific island countries. In my mind, this seems a sensible and refreshing approach, especially in micro-states like Tuvalu where aid money is likely to remain a large proportion of GDP. At the same time, it shouldn’t justify a deterministic approach, nor is it appropriate in larger countries.

No doubt, the choice of Dr. Iweala would be an excellent choice given her track record of outstanding success in turning around Nigeria's economic scene.