"New" Donors: A New Resource for Family Planning and Reproductive Health Financing?

Malea Hoepf Young

Aid volumes

Assessing the non-DAC donor landscape is difficult, although it is certain that the contribution of non-DAC donors remains relatively low in comparison to that of DAC members, who contributed $106.8 billion in ODA in 2005.¹⁷ DAC countries are required to have aid volumes either over US$100 million, or an ODA to GNI ratio over 20 percent, as well as to provide annual required ODA statistics to the DAC, among other requirements. Some donors that are not members of the DAC still follow specific tracking guidelines set by the DAC and report their aid to the DAC’s tracking mechanism, which shows that in 2005, 17 non-DAC countries reported $3.2 billion in ODA. Non-DAC countries that are members of the OECD, such as South Korea – which is preparing to join the DAC in 2010 – Turkey, and the Czech Republic, contributed $1.9 billion, and Arab states gave $0.7 billion . Many non-DAC donors operate very differently from the aid classification and reporting guidelines of the DAC, as well as other guidelines required for DAC membership, including China and India, some of the most important non-DAC donors.¹⁸ This leads to conflicting estimates of these countries’ giving. Manning estimates that China provides $2 billion per year, and India provides $1 billion, while the EU estimates that China contributes $5 billion in development assistance per year, and India contributes $100 million per year. Another observer considers these figures too conservative, and estimates India’s aid at $300 million annually. ^{19 20 21}  The structure of foreign aid programs in many non-DAC countries further complicates tracking. Responsibilities for foreign aid are spread throughout various ministries, making it difficult to track expenditures, and many provide in-kind donations, which vary in valuation.²²

While aid of non-DAC countries is unlikely to surpass that of DAC donors and development banks in the foreseeable future,²³ non-DAC funding is likely to continue to rise for multiple reasons. New EU members that are not yet members of the DAC are increasing ODA to meet EU membership targets (they are attempting to reach targets of ODA as 0.17% of GNI by 2010, and 0.33% by 2015, although the size of their economies make their absolute contribution relatively small). Some non-DAC countries with large ODA programs, such as South Korea and Turkey, are expanding their programs further, as are some states with smaller programs. Finally, India and China, with their booming economies, are expanding their aid programs in a professed spirit of South-South cooperation, as well as to raise their international profile and expand access to natural resources and new markets for their goods.²⁴ Further, the increasing array of donors provides new funding opportunities for recipient countries and more leverage with traditional DAC donors and development banks. Recipients also find some non-DAC donors appealing because they do not place the same conditions on aid as do DAC members or large development banks.²⁵

“New” donors and the push for aid effectiveness

In 2005 the international community endorsed the Paris Declaration on Aid Effectiveness, which galvanized the push for increased country ownership, aid alignment, and donor harmonization.²⁶ As non-DAC donors—including China and India—increase their international aid, some critics are concerned that the proliferation of donors will undermine aid effectiveness, labor conditions, and environmental standards, and fragment efforts to harmonize donor practices.²⁷

The DAC sets standards that are supposed to increase the positive impacts of donor aid from member countries. For example, DAC discourages aid that is tied to goods and services from the donor country. DAC donors are supposed to place positive conditions on aid, including requirements for good governance, human rights and transparency, as well as environmental, labor, health standards.²⁸ Further, all DAC members endorsed the Paris Declaration principles, including being increasingly guided by recipient strategies and priorities, and committing to higher levels of collaborations with the partner country and other donors.²⁹

These donor guidelines are highly criticized and are often ignored in practice. Recent studies of the Paris Declaration have found that the new guidelines exacerbate the power imbalance between donors and recipient countries and place greater reporting burdens on recipients, both of which undermine the goal of country ownership espoused in the Declaration.³⁰ Furthermore, some argue that the Paris Declaration's emphasis on recipient country ownership is undermined by threats to sovereignty implicit in conditional aid extended by DAC members and multilaterals.³¹ However, these standards are important because civil society groups and recipient country governments can hold DAC donors accountable to their positive aspects. And DAC reporting guidelines (discussed in the previous section) increase donor transparency and accountability.

While most non-DAC donor countries are officially listed as adhering to the Paris Declaration, supporting improved donor practices in their role as aid recipients, many do not follow these guidelines as donors. In Africa, for example, China offers substantial support in exchange for access to natural resources, contracts, and ending diplomatic relations with Taiwan, without conditions related to human rights and governance in the recipient countries.³² This has led to fears among DAC countries that incentives to improve governance and human rights will be undermined by these new sources of funding. Further, some non-DAC donors provide “soft,” or low-interest loans to other countries, leading to concerns that formerly Heavily Indebted Poor Countries (HIPCs) that benefitted from debt relief will again borrow at unsustainable levels. ³³ 

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