Highlights
UNCTAD´s 2006 report on Economic Development in Africa examines how the commitment by the international community to double aid to Africa might place the continent on a sustainable development path. The central message of the report is that, if this commitment is to translate into big reductions in poverty and lasting gains in economic welfare, new thinking is required to tackle the unbalanced state of the international aid system. The report identifies the flaws in the existing system, such as high transaction costs, politicization, lack of transparency, incoherence, unpredictability, and excessive demands placed on the weak institutions of recipients.
According to the report, a "big push" provides a sensible alternative in seeing how renewed capital accumulation (in both the private and the public sector) can link up to structural and technological change, unleashing a cumulative process of rising productivity, incomes and savings. A "big push" would require a new aid architecture with a much larger multilateral component, managed under different institutional arrangements, and the provision of much greater policy autonomy to recipients.
The report, drawing on both positive and negative aid experiences, suggests that greater multilateralization of aid "… can help to reduce unnecessary and costly competition among donors, and thus greatly reduce administration costs. It can also provide a buttress against the politicization of aid which has been so damaging in the past." From the recipient side, multilateral aid in the form of budget support can be subject to parliamentary oversight, be based on national programmes and priorities, and be responsive to national constituencies rather than donor Governments and multilateral financial institutions. The report suggests that the time is "perhaps right to revisit the idea, first broached in the 1950s, of a UN funding window" tailored to African development needs.
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