Aid still at 1993 level despite increase

WASHINGTON, DC — The 10 percent increase in foreign aid to $120 billion is welcome but still nowhere near enough to meet the needs of poor countries in the face of global economic meltdown, said international relief and humanitarian agency Oxfam today. At just 0.3 percent of national income, aid is at the same level it was in 1993.

Global aid levels—published today by the Organization for Economic Cooperation and Development in London—are also minimal in comparison to the $8.4 trillion mobilized to bailout ailing banks, Oxfam said. At $173 billion, the American Insurance Group (AIG) alone has received $50 billion more than total global aid levels.

"Despite this welcome increase, aid levels remain tiny compared to the economies of rich countries—just 0.3 percent," said Max Lawson, head of development finance for Oxfam. "That is the same as it was in 1993. They have found 70 times more, $8.4 trillion, to save banks. Aid is an absolutely vital lifeline for the poorest people, especially in these brutal economic times. Far more is needed, and needed now."

"While aid alone is not enough for the poorest countries to escape the poverty trap—quality, long-term aid does make a huge difference. Poor country governments have used aid to scale up spending on education and health to help fight poverty," said Lawson. "The Tanzanian government used its aid income to offer free schooling to its primary-aged children—and now 3.5 million more children are now in school. Tanzania also used aid to strengthen its health services, helping to reduce the number of children dying in their first year of life by almost a third."

"Rich countries can come up with the money when they want to. AIG's executive bonuses alone could have paid for enough teachers for 7 million children in Africa. We need to see the G-20 move fast in London this week to rescue babies not just bankers," Lawson said.

Foreign direct investment into developing countries has collapsed by more than $700 billion since 2007—more than six times total aid levels. Remittances are also falling rapidly as unemployment rises in the rich world. Global trade has ground to a virtual halt. Aid is needed now more than ever to help the poorest countries weather the economic tsunami.

The OECD's figures show that aid has increased by 10 percent in real terms in 2008 to $120 billion. However, Sub-Saharan Africa—despite being the poorest region on earth—only saw a tiny increase of just 0.4 percent to $22.5 billion.

Most rich nations still have a mountain to climb to meet their 2005 promises to increase global aid by $50 billion by 2010, with half of this going to Africa. Italy, the G8 chair in 2009, is the worst offender. The OECD calculates that Italy will need to increase its aid spending by 145 percent to meet its promise. The shortfalls must be acknowledged and a clear timetable set to increase aid to meet pledges.