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Commonwealth finance ministers call for aid reform

22 September 2011

WASHINGTON DC, 21 September 2011: Commonwealth finance ministers, meeting in Washington DC on 21 September 2011, called on the international community to strengthen mutual accountability backed by transparency in delivery and use of aid, in order to make it effective in creating jobs, improving livelihoods and combating poverty.

The ministers noted that the manner in which aid is delivered can impact domestic accountability of both partner and donor countries, and therefore said that there is need for greater openness and better tracking for both parties.

“We agreed that the achievement of results often hinges on factors beyond the control of partner countries and that care needs to be taken to prevent the escalation of conditionality for external assistance based on these results. We also recognised the inherent tensions which can emerge in the interplay between political systems and administrative and bureaucratic systems, each with differing expectations, processes and accountabilities,” said Pravin Gordhan, South Africa’s Finance Minister who chaired the meeting.

The ministers noted that aid reforms have been uneven, with recent evidence signalling relatively stronger progress among partner countries, where reforms have taken hold and momentum sustained through political changes and through external crises; while with some noticeable exceptions, many donors have proved risk averse and reluctant to make a number of anticipated changes.

 

On his part, Commonwealth Secretary-General Kamalesh Sharma said that the Commonwealth contains an increasing share of the world’s poorest people, placing significant importance on the ability of the association’s poorest, smallest and most vulnerable members to secure reliable, consistent and additional sources of financing for development, including protecting existing flows of aid.

“The sustainability of such aid therefore remains crucial to the Commonwealth’s developing countries,” Mr Sharma said.

Ministers also discussed the role of the G20 - the group of the twenty most industrialised countries - in accelerating global recovery, and pointed out that while the G20 represents a systemically important group, it does not possess all the elements of a solution to global recovery.

“Many solutions can in fact be found in a wide range of other developing countries. The G20 has the responsibility to ensure that the voices of those not in the G20 are continuously heard, and the Commonwealth is well placed to reflect the views of these countries, particularly the smallest and most vulnerable, because of the organisation’s potential and effectiveness as a forum through which consensus on global policy issues can emerge," Mr Gordhan said.

Ministers shared experiences in both providing and utilising existing sources of innovative finance for development, and noted that securing new funds is crucial for developing country members of the Commonwealth as they strive to achieve the UN Millennium Development Goals targets by 2015. They noted that within the Commonwealth there are a wide range of examples of successful development and use of innovative finance instruments and practices, which deserved closer analysis and which offered the potential for scaling up and broadening the use of innovative finance instruments across the Commonwealth. Ministers agreed that the Commonwealth Secretariat will pursue a focused programme of work to widen the sharing of experience and knowledge within the Commonwealth on current and potential future sources of innovative finance for development.

They noted that a new approach to effective development partnerships is emerging, characterised by increased South-South co-operation, increased contribution to aid and development finance by emerging markets, and a greater sharing of responsibility by developing countries themselves in promoting and taking ownership of their development. This includes creating new investment opportunities and new financing instruments for development. Ministers urged that this process continue and recognised that the Commonwealth has an important role to play in this regard.

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