Role of Multilateral Aid Agencies in Poverty Reduction

Dr. muhammad G. SarwarSarwar_mg@ yahoo.com

Civil Service College, Dhaka 10 July 2011

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Presentation Contents• Foreign Aid Flow in to Bangladesh: trend

analysis• Dominant Players in Development Assistance

in Bangladesh: the gang of four• Multilateral Donors– World Bank/IDA– ADB (Asian Development Bank)– UN System– Pros and Cons of Multilateral Assistance

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Periodic Flow of Foreign Aid 1972-2010 (in billion US$)

FY Food Aid Commodity Aid

Project Aid

Total Aid Average Yearly

Aid1971-1980

2.090 2.768 1.749 6.607 660

1981-1990

2.346 4.435 7.340 14.121 1.412

1991-2000

1.537 3.169 10.911 15.617 1.562

2001-2010

613 536 15.104 16.253 1.625

Total 6.586 10.908 35.104 52.598 1.315

% share 12 21 67 100

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Periodic Flow of Foreign Aid 1972-2010 (in billion US$)

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Types of Foreign Aid 1972 -2010 (in %)

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Ten largest Donors in Bangladesh FY 1972-2010 (in million US$)

SL Donors Grant Loan Total Share (%)

1 World Bank 269 11664 11933 22.69

2 Asian Development Bank

70 8114 8184 15.56

3 Japan 3308 3753 7061 13.42

4 USA 2,787 763 3,550 6.75

5 UN System (except UNICEF)

2744 20 2764 5.25

6 Canada 2087 16 2103 4.00

7 UK 1973 89 2062 3.92

8 Germany 1436 268 1704 3.24

9 European Union 1534 48 1582 3.01

10 Netherlands 1,078 71 1,149 2.186

Ten Largest Donors in Bangladesh

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Multilateral Donors

• World Bank / IDA / IBRD• ADB (Asian Development Bank)• UN System (UNDP, UNICEF, IFAD, FAO, WFO,

WHO, ILO, etc.)• EU (European Union)• IDB (Islamic Development Bank)• OPEC (Organization of Petroleum Exporting

Countries)8

World Bank: an introduction• World Bank, established in 1944, is

headquartered in Washington, D.C. • World Bank is a vital source of financial and

technical assistance to developing countries around the world.

• mission is to fight poverty with passion and professionalism

• made up of two unique development institutions owned by 187 member countries: the IBRD and the IDA.

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World Bank: an introduction (contd.)• IBRD aims to reduce poverty in middle-income and

creditworthy poorer countries, while IDA focuses on the world's poorest countries.

• Their work is complemented by that of the IFC, MIGA and the ICSID.

• provide low-interest loans, interest-free credits and grants to developing countries for a wide array of purposes that include investments in education, health, public administration, infrastructure, financial and private sector development, agriculture and environmental and natural resource management.

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IDA Commitment and Disbursement (billion US $)

Commitment Disbursement Pipeline on 1st July 2010

Project Aid 11.93 9.42 2.69

Commodity Aid 2.49 2.24 0.25

Total Aid 14.63 11.94 2.69

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IDA Commitment and Disbursement (billion US $)

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Trend of IDA Commitment and Disbursement (million US $)

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World Bank CAS for Bangladesh (FY11-14)

• new strategy supports the country’s ambitious aspirations to reduce the poverty rate from 40 to 15 percent and achieve middle-income status by 2021.

• It proposes record levels of technical and financial support, including IDA lending of more than $ 6 billion in the coming four years based on continued strong country performance.

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World Bank CAS for Bangladesh (FY11-14)(contd.)

• Areas of WB Investment: – economic infrastructure– reduce vulnerability to the effects of climate

change – maintain long-standing support for human

development and social welfare– enhance core governance and strengthen local

government– empower communities– regional cooperation in South Asia.

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ADB (Asian Development Bank)• ADB in Asia and the Pacific Region• ADB's vision is ‘an Asia and Pacific region free of

poverty’• ADB's mission is to help its developing member

countries reduce poverty and improve living conditions and quality of life

• ADB is a multilateral development bank, dedicated to reducing poverty in Asia and the Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration.

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ADB (contd.)

• ADB was established in 1966 under the Agreement Establishing the Asian Development Bank (Charter), which is binding upon the member countries that are its shareholders. As of 31 December 2010, ADB had 67 members, of which 48 were drawn from Asia and the Pacific region.

• ADB is headquartered in Manila, Philippines and has offices worldwide including representative offices in North America (Washington, DC), Europe (Frankfurt), and Japan (Tokyo).

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ADP: Policies and Strategies• In 2008, ADB's Board of Directors approved Strategy

2020 for the period of 2008-20• Strategy 2020 reaffirms both ADB's vision of an Asia and

Pacific free of poverty and its mission to help developing member countries improve the living conditions and quality of life of their people

• Strategy 2020 identifies drivers of change: – developing the private sector– encouraging good governance– supporting gender equity– helping developing countries gain knowledge– expanding partnerships with other development institutions,

the private sector, and with community-based organizations18

ADP: Policies and Strategies (contd.)

• By 2012, 80% of ADB lending will be in five core operational areas:– Infrastructure, including transport and communications,

energy, water supply and sanitation and urban development

– Environment– Regional cooperation and integration– Finance sector development– Educationo ADB will continue to operate in health,

agriculture, and disaster and emergency assistance, but on a more selective basis.

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ADB’s Bangladesh country operations business plan, 2011-2013

• Bangladesh joined ADB in 1973• Cumulative lending amounts to about $12.1

billion for 212 loans, with $202.7 million for technical assistance grants for 363 projects

• Bangladesh is one of the largest borrowers of concessionary Asian Development Fund resources.

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Bangladesh country operations business plan, 2011-2013

• Bangladesh country operations business plan, 2011-2013, approved in July 2010, comprises 24 projects totaling about $3.2 billion, including assistance for – primary education – energy and – transport sector

• Technical assistance program for 2011-2013 consists of 41 projects, with an annual allocation of about of $7.9 million.

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Bangladesh ADB Country Strategy and Program Strategic Focus

• Sustainable Economic Growth• Social Development• Good Governance• Disaster Mitigation• Capacity Building• Private Sector Development• Gender• Regional Cooperation• Environment• Improving Implementation• Harmonizing Assistance

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ADB Commitment and Disbursement (billion US $)

Commitment Disbursement Pipeline on 1st July 2010

Project Aid 10.48 7.51 2.12

Commodity Aid 0.59 0.68 0.0

Total Aid 11.07 8.19 2.12

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ADB Commitment and Disbursement (billion US $)

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Trend of ADB Commitment and Disbursement (million US $)

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UNDP• UNDP is the United Nations' global development

network, an organization advocating for change and connecting countries to knowledge, experience and resources to help people build a better life.

• World leaders have pledged to achieve the Millennium Development Goals, including the overarching goal of cutting poverty in half by 2015. UNDP's network links and coordinates global and national efforts to reach these Goals

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UNDP (contd.)

• UNDP focus areas:– Democratic Governance– Poverty Reduction– Crisis Prevention and Recovery– Environment and energy– HIV/AIDS– Capacity development , and– Empowerment of women

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Human Development Report

• Annual Human Development Report, commissioned by UNDP, focuses the global debate on key development issues, providing new measurement tools, innovative analysis and often controversial policy proposals.

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UNDP Bangladesh• UNDP embarked on its journey in Bangladesh

on 31 July 1972• UNDP focus areas:– governance, – poverty reduction, – environment, – energy and climate change, – disaster management, and – achievement of Millennium Development Goals

(MDGs)

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UNDP Projects

• UNDP active projects are classified as: – Democracy and Governance– Local Governance– Peace and Development– Local Poverty Reduction– Climate Change Mitigation and Energy– Environment– Climate Change Adaptation and Disaster– MDGs and Pro-Poor Development

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UN Commitment and Disbursement (billion US $)

Commitment Disbursement Pipeline on 1st July 2010

Project Aid 2.37 1.77 0.6

Commodity Aid 0.19 0.19 0.0

Food Aid 1.91 1.72 0.19

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UN Commitment and Disbursement(billion US $)

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Trend of UN (excluding UNICEF) Commitment and Disbursement (million US $)

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Multilateral Donors: a critique • Multilateral Donor Agencies are created by the Victor Countries

of the Second World War to assist the newly decolonized countries to bring them in the global market system.

• Multilateral donors are dominated by the few western powers and thus carried away by the wishes of the big donors and are used by the big donors to implement their global strategic interest.

• Aid disbursement by the Multilateral donors could be slow due to complex decision making procedure at the Headquarters.

• However, to some extant power structure of Multilateral donor agencies are defused resulting some voice for the poor recipient countries.

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Thanks !

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