News Selection – Finance for Sustainable Development
Recent news chosen to update Tread Softly briefings on Finance for Sustainable Development.
China's FOCAC Financial Package for Africa 2018: Four Facts
3/9/2018: The 2018 financial pledges in support of the Forum on China-Africa cooperation reveal that the Chinese state is putting $50 billion of its own money at stake, while encouraging Chinese companies to contribute through investment projects. Source: China Africa Research Initiative
Tread Softly Comment: This brief article is probably the most forensic analysis of the FOCAC 2018 outcome currently available, although it should state more clearly that the figures shown will be spread over three years. The most significant conclusions are that China is not yet contemplating significant debt relief for overstretched economies, and that the amount of aid that would probably qualify as "official development assistance" under OECD guidelines is only $5 billion per annum, less than current US support for sub-Saharan Africa. Relevant Briefing: Aid Statistics
Despite debt woes, Africa still sees China as best bet for financing
31/8/2018: A wave of African nations looking to restructure debt with China on the eve of a major Beijing summit provides a reality check for the continent, where most countries still view Chinese lending as the best bet to develop their economies. Source: The East African
Tread Softly Comment: The three-yearly Forum on China-Africa Co-operation Summit in Beijing this week will update the profile of Chinese investment in Africa. IMF reviews of African economies are increasingly twitchy about debt-to-GDP ratios, largely on account of large-scale Chinese loans. But the infrastructure projects are a necessary stepping stone to development and the lending terms more attractive. The transparency of the event is an unknown factor. Relevant Briefing: Sovereign Debt
German aid minister slams proposed cuts as 'completely incomprehensible'
12/7/2018: The world's second-largest bilateral donor is on track to miss the 0.7 percent aid target as politicians approved a lower-than-expected budget for 2018 and 2019. Source: Devex
Tread Softly Comment: The article doesn't speculate whether this cut in foreign aid was provoked by Trump's bullying of NATO contributors or by the new-found strength of Angela Merkel's right-of-centre coalition partner. Either way, the commitment of the German coalition government to maintain a common trajectory of funds for development and defence has been shredded. The defence budget for 2019 is up 10%, the development budget is heading for a fall. An ominous outcome for the funding resolve of other donor countries. Relevant Briefing: Aid Politics
Green funds fade for developing countries
28/6/2018: With the US halving its contribution to the Global Environment Facility, one of the world's most important green funds sees its first budget cut in 27 years. The poorest countries will struggle to meet the tighter conditions for funding. Source: The Third Pole
Changing patterns of humanitarian assistance
19/6/2018: The association of humanitarian assistance with "emergencies" has become less significant. Almost all of the 20 largest recipient countries in 2017 reflect either long-term or medium-term crises.
Should foreign aid benefit the donor country?
5/6/2018: Owen Bader unpicks the debate about foreign aid tied to the interests of the donor country as much as the beneficiary. He concludes that aid that addresses one of the underlying causes of global poverty will benefit all parties.
Leverage of private finance for SDGs is not a silver bullet
30/4/2018: The international aid community constantly asserts that the use of public funds to leverage private sector investment is a critical tool for achieving development goals. What are the flaws in this argument?
Another Debt Crisis for Poor Countries?
18/4/2018: A new IMF report warns that 24 out of 60 low-income countries are either already in a debt crisis or highly vulnerable to one. Action now by borrowing country governments can prevent the crisis spreading.
Development aid to Africa at last reachess $25 billion
9/4/2018: Foreign aid from official donors totalled USD 146.6 billion in 2017, a small decrease of 0.6% from 2016 in real terms, according to provisional OECD figures. Aid to sub-Saharan Africa was also up by 3%, finally reaching USD 25 billion.
Uganda joins Africa's big-debt club
23/3/2018: In three years, Uganda's debt has risen from $6 billion to $15 billion, the government ramping up borrowing, mostly from China, to fund infrastructure projects. Now the country's central bank is concerned about repayments.