As the UN marks the International Day for the Eradication of Poverty on Wednesday, aid experts say donors must work closely with local governments, which in turn must do more to foster the economic growth that could lift millions out of poverty.
In the last 25 years more than 1 billion people have emerged from extreme poverty and the global poverty rate is now lower than at any other time in history, according to the World Bank.
The UN’s Millennium Development Goals of 2000 agreed to halve the number of people living in extreme poverty and hunger by 2015, a goal that was met ahead of schedule. The poverty rate fell from nearly 36 percent in 1990 to 10 percent in 2015 (the latest World Bank figures available) – or an average of 1 percent a year. The bank forecasts that extreme poverty rates will have declined further, to 8.6 percent, by the end of 2018.
Picking up where the Millennium Development Goals left off, the UN’s Sustainable Development Goals of 2015 now aim to “end poverty and hunger everywhere” by 2030. But the effort to achieve this goal may face challenges from a concurrent rise in the number of poor who are living in nations with weak central governments.
An LSE-Oxford report on growth and development released in April found that by 2030, half of the world’s poor will be living in “fragile states” – those nations so beset by conflict or corruption that the leadership lacks the ability or legitimacy to provide basic public services, sustain economic growth or create jobs.
Under such challenging circumstances, international agencies – including NGOs, donor countries and multilateral institutions like the UN and IMF – must fundamentally rethink their approaches, including adopting a more realistic view of what can be achieved locally, the report found. Many programmes fail because they overestimate what a struggling government is capable of achieving while other failures result from governments being coerced into adopting projects that do not address their needs.
Above all, donors "must stop setting out long lists of unachievable objectives and unrealistic timetables, and start working with governments rather than around governments”, the report said.
Helping states succeed
Experts in development have long considered the merits of “top-down” versus “bottom-up” approaches. And with the number of people living in fragile or failing states rising sharply, the question of whether aid is more effective when provided directly to governments or to NGOs providing relief and community services on the ground seems as pertinent as ever.
“When it comes to who to give the aid to, the answer is 'that depends',” said Charles Kenny, a senior fellow at the Washington-based Center for Global Development think tank. “In most cases, working with governments to help them do more or do better at delivering the infrastructure and services they are already providing to citizens is the most sustainable and effective way to help.”
“But sometimes, especially when the aim is to help keep governments themselves to account, it is better to work through NGOs.”
Foreign aid can make a huge difference in people’s lives, but only if governments are concurrently pursuing sound, long-term policies.
To ensure maximum impact, aid must follow a set of “effectiveness principles”, said Jesse Griffiths, head of the Development Strategy and Finance programme at the London-based Overseas Development Institute.
“First, effective aid must be owned by the recipient – it must fit in with country plans or it is likely to go nowhere," said Griffiths, echoing the warnings of the LSE-Oxford study.
"Second, it must be transparent and accountable, particularly to the people benefitting. This is also the key to preventing corruption," he said. "Finally it must be focused where it is needed most, targeting the results that make a difference to the poorest.”
The vast majority of the world's poor live in rural areas and work in agriculture; in eastern Africa, 70 percent of the population makes its living from farming. Farm Africa is one NGO working in cooperation with local and national governments – as well as with farmers on the ground – to increase their output and provide much-needed resources, including warehouses to store crops and vaccines to protect livestock.
But some development experts warn of the dangers of allowing NGOs to eclipse the roles that should be played by governments.
“International aid to NGOs can help ensure that health and schooling and other social services reach the world’s poorest households,” said Nancy Birdsall, a founding president of the Center for Global Development and a senior fellow. “But it cannot be a substitute for aid that supports national governments in reforming and strengthening the public institutions,” including providing social services, investing in infrastructure, establishing an effective regulatory framework, implementing fair tax policies and allocating public funds.
“Development in the end is about an accountable and responsive government,” Birdsall said.
Suresh Babu, a senior research fellow and head of capacity strengthening at the International Food Policy Research Institute, said that whileNGOs do an “excellent job” saving lives during acute crises, they sometimes inadvertently become part of a “parallel system” in countries with poorly run federal governments.
International food aid provided short-term solutions in much of Africa, for example, but foreign donors then failed to establish permanent alimentary systems by improving conditions for farmers. He said poor accountability, trouble with implementation and a lack of long-term focus resulted in “a proliferation of international NGOs replacing the role of the government”.
“In the long run, local and federal initiatives are sustainable solutions,” said Babu. “But aid from International NGOS should build [up] the local capacities of the national systems rather than replacing them.”
A tide that lifts all boats
While aid and development can offer vital relief from the most acute deficiencies, the need for national governments to pursue sustained economic growth concurrently remains inescapable. NGOs, indeed, may be most effective when they help local authorities achieve this goal.
What eliminates poverty is “rapid, broad-based, economic growth”, according to Lant Pritchett, a development economist and professor of the Practice of International Development at Harvard’s Kennedy School of Government. “Productivity-led growth creates jobs and higher wages and business opportunities that raise the incomes of the non-poor and poor” alike.
Pritchett noted that it was economic growth that led to the sharp falls in poverty seen in China – which has accounted for a significant portion of the global reduction – as well as in Vietnam and Indonesia.
“So aid organisations should focus on helping countries and regions and communities create productivity growth,” he said.
Babu cited vocational training programmes for young people as a “quick way to bring them out of poverty”. But he said long-term success still depends on the policy environment and the support they get from governments to help them make the transition from low-skilled to skilled work.
Jonathan Leape, executive director of the International Growth Centre at the London School of Economics, agreed that rising productivity is key and said that encouraging fledgling private sectors can be crucial.
"The only sustainable way to move millions of people out of extreme poverty is to transition them to more productive jobs,” Leape said.
“Targeting aid to develop the private sector – from supporting skills development to ensuring that entrepreneurs have access to electricity and helping local companies to export – can help businesses create the jobs that allow people to lift themselves and their families out of poverty.”
To maximise their impact, NGOs should seek out solutions that are easily reproducible by either the public or the private sector, according to Farm Africa CEO Nicolas Mounard.
“The most effective poverty reduction policies for farmers in Africa are those that can be rolled out at a large scale to help significant numbers of people,” Mounard said. Aid from international NGOs "is most helpful when it is used to demonstrate proof of a concept that can be taken to scale by others, be that government actors or the private sector”.
“[W]hen we first design a project, right from the start we have in mind who will be able to replicate the approach and roll it out to reach many more times people than we would be able to reach ourselves,” he said.
Holding power accountable
But while governments may be the key to long-term progress, some states remain unable to tackle widespread poverty among their populations.
Development aid “remains vital, particularly in countries that lack domestic resources to deliver on basic public services and other investments needed to end poverty and reduce inequalities”, said Oxfam's Robin Guittard, a senior campaigner on financing for development issues.
NGOs also have an important role to play in tackling entrenched, systemic inequalities and preventing them from self-perpetuating. To be truly effective aid must take a double-pronged approach, said Guittard.
“First, aid is key to help build effective states. This means making public institutions stronger and more accountable to their citizens,” he said. “It also means funding chronically under-resourced national budgets on health, education and social protection. Investments in these sectors are proven to have the strongest impact in lifting people out of poverty.”
But support to states “must be matched with support to active citizens, who will monitor and influence decision-makers, and hold them to account to deliver on basic rights”, he said.
“The poorest people, marginalised groups, and women and girls are often entirely excluded from decision-making, or even the opportunity to scrutinise decision-makers,” Guittard noted. “This is not only an unjustified limitation of their rights, but a recipe for greater inequality[,] as those who have power and voice are able to shape policies and spending decisions to give them yet more money and power, whilst the majority of people are left behind.”
International organisations can help by leveraging their clout to hold those in power accountable, said Julie Vaillé, a senior research fellow at the Institute of Sustainable Development and International Relations, an independent policy think tank in Paris.
Aid groups can be “an important player in the democratic debate”, she said, including “putting direct pressure on those in power and demanding they are held accountable”.
“When NGOs publicly denounce the shortcomings of government policies, the pressure might force the administration to respond to the criticism.”
But attempts to safeguard donor aid from local government malfeasance are largely wishful thinking, according to Pritchett.
“[T]he idea that donor policies and procedures can ‘ring-fence’ resources so that they are well used and directed to ‘good’ activities – even in places that are otherwise dysfunctional and corrupt – is mostly a myth," he said in an email.
It is better that donors try to maximise their influence by carefully selecting where to operate and supporting homegrown government efforts that are already moving in the right direction.
The “right support at the right time in the right place can have enormous impacts on growth”, he said.