One Championship

Taking stock of development assistance


A farmer ploughs the land with a tractor as he prepares to grow rice ahead of the rainy season in Naypyitaw, Myanmar, 12 June 2017. Photo: Hein Htet/EPA

Outlining a perspective of self-reliance and appealing for nuanced understanding of Myanmar’s situation vis a vis peace and national reconciliation, Daw Aung San Suu Kyi, the de-facto leader of Myanmar spoke on the occasion of first anniversary of the NLD led government in March 2017 that“…We value the support, help and sympathy of our friends around the world, in our efforts toward peace and national reconciliation. But we must work ourselves for our country’s responsibilities, because we are the ones who best understand what our country needs.”

This sums up the mood of most developing countries who are recipients of International development cooperation also called official development assistance (ODA) or simply ‘aid’ for development and humanitarian purposes.

As a matter of fact, the days of altruistic motives of the rich countries providing aid and support to the poor or developing countries, in the form of ODA, appears to have been over, and now it is the trade and economic considerations that dictate relationship between countries.The colonial legacy and bleeding hearts responding to the needs of the poor is increasingly been replaced by ideas of co-creation of value at the base of the economic pyramid and social enterprises that work for the poor.

Over the many past decades the development aid is shrinking, as the data from OECD points out only a few rich countries of the OECD adhere to the commitment of 0.7 per cent of GNP set aside as aid to the poor countries. Few Scandinavian countries honor such commitments and it is disappointing that countries like USA and Australia are attempting to further reduce their foreign aid (as per a report the Trump administration proposes a reduction of 28% in their commitment to foreign aid and diplomatic funding).

In fact, some of the recent studies on aid flows and capital flows point out the reverse flow of resources; i.e developing countries and poor countries to the rich countries is far more in quantum than the aid that they receive. A report prepared by Global Financial Integrity points out that for every $1 flow (official development aid, trade and investment) to the poor countries, the rich countries receive $24 in return!  While such calculations may be seen as too simplistic and does include all types of returns (and practices like profit shifting, tax evasion and avoidance by companies, illegal and illegitimate transfers), the point is that development finance cooperation and support need to be seen from the perspective of a win-win game for any two countries.In the first place such a situation of ‘reverse flows’ occurs as many developing countries often lack policies and institutions to address some of the weaknesses and loopholes in its economic governance that suffers from elite capture as well. The presence of tax havens also exacerbates the problem. It is precisely to address these weaknesses that the official bilateral development aid and support of multilateral bodies needs to work; strengthening of those institutional and governance mechanisms and new rules in countries and across countries so that leakages are plugged.

From the Global South, China appears to have understood the purpose of development assistance as complementary to private investments. According to a white paper on China’s Foreign Aid (2014),  “….The basic principles china upholds in providing foreign assistance are mutual respect, equality, keeping promise, mutual benefits and win-win” . While practice of these principles is a matter of debate, it brings forth a pragmatic understanding of the role that aid can play and ought to play in the changing circumstances.

Most rich as well as poor countries thus need to recalibrate their economic policies and trade relations with a sense of reciprocity and Myanmar’s’ vast natural resource base, as well as its growing consumer base plays significant role in this respect as the country opens up for market driven economic paradigm.

In the case of Myanmar, development aid (by bilaterals and multi-lateral agencies) still remains significant in quantity (may not be as a proportion of all development finance) and in fact may increase in the coming years as many Western as well as neighbouring countries look at it as a destination for private investments.  As understood by many, official ODA often works as a tool for building robust relationships between countries.  Myanmar’s neighbours like China and India have also been providing significant development aid in the form of various projects in order to propel private trade and investments.

Where aid works better is a big dilemma and challenging question for many development practitioners.  Effectiveness of aid has been a contentious issue.  However for Myanmar, from the early on development partners and the government have come to a basic understanding that the development assistance (aid) needs to propel national development goals and its effectiveness be measured against set of indicators that demonstrate alignment of priorities of donor countries with Myanmar’s  development goals. This is significant as many transition countries have suffered due to ‘aid fatigue’ of donors. In Myanmar efforts are being made to place systems (though nascent and need to be strengthened) at the union government level that make efforts to coordinate the development aid flows into the country.  Periodic donor community meetings, sectoral working groups, space for CSOs for discussion, aid monitoring reports by the ministry of planning and finance signify the seriousness that the government attaches to the development aid and its effective utilization. However at the ground level this needs to be translated into sectoral goals and priorities which is a tardy job as far as the progress goes. The ministries and departments need to work further on identifying and prioritizing the aid flows to the State/regions so that inclusive and equitable development takes place.  Harnessing committed development aid for addressing climate change is another area where the country appears to be very slow. The national climate change adaptation plan, which has been drawn up recently need to actively utilize this commitment.  Technical assistance in climate change adaptation, disaster preparedness etc. are some of the cutting edge areas where Myanmar needs to rely on the donor community.

Apart from large infrastructure development projects funded through a combination of aid and loans, development assistance plays a significant role in terms of transfer of technology, modernizing sectors like agriculture and livelihood promotion and for gender empowerment. Its support to social sectors is also to be recognized. A rough calculation points out that about 9 per cent of expenditure of Myanmar’s budget is supported by development aid which in large proportion goes to social sectors.  Reaching development assistance and public services to the needy and remote areas is another concern wherein foreign aid can complement the efforts of the national government. 

As Myanmar committed to the SDGs, it would be prudent for the government to draw action plans at the union as well as state/regional levels so that they can form a basis for the flow of development assistance from the donor community. National adaptation of SDGs thus becomes critical and timely in this direction.

More Articles