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Aid unlikely to return to 2010 high any time soon

Posted by African Press International on October 29, 2013

Aid unlikely to return to 2010 high any time soon

DAKAR, – Aid from the top 15 global donors – all from the Organisation for Economic Co-operation and Development’s (OECD) Development Assistance Committee (DAC) – is estimated to reach US$127 billion by the end of 2013, reversing the aid declines of the last two years, according to projections from the Australian National University’s Development Policy Centre.

This represents a less than 1 percent increase over 2012, and is mainly due to some donors pursuing the commitment to give 0.7 percent of national income to development aid by 2015, a promise made by 15 European governments in 2005. The UK has promised to stick to this commitment, agreeing to raise aid from 0.56 percent to 0.7 percent of GNI, representing an increase of $3.7 billion.

“One can only speculate [as to why], but… the predominate theory is that [UK Prime Minister] David Cameron’s commitment to overseas aid is part and parcel of fashioning a new, compassionate brand of conservatism,” said Robin Davies, associate director of the Development Policy Centre and co-author of the report. “There is, at present, no reason to doubt that they [the UK] will meet its spending target,” he continued, “but programming an additional $3.7 billion in a single year is no mean feat.”

Without this hike from the UK, global aid would probably have fallen by 3 percent over the course of 2013, as most DAC donors reduced their aid, with a few exceptions, including Switzerland, Sweden and Italy.

The US, for example, is expected to have reduced its global aid spending by $1.7 billion in 2013, and the Netherlands by $1.23 billion, following austerity cuts at the end of 2012.

Researchers based their aid predictions on what the 15 largest DAC donors have pledged to spend this year, compared to their spending intentions at the same time last year. These top donors account for around 95 percent of official development assistance.

Non-DAC buffer

Even if the UK does not reach its global aid goal, Davies said the overall drop in global aid would be quite small. It is likely an increase in aid from non-DAC emerging donors and NGOs, as well as contributions from multilateral sources, which often take a while to “filter through the system,” would all act as a buffer against any drastic decreases in global aid.

Aid from non-DAC sources, including emerging donors and NGOs, has risen by several billions of dollars each year on average, reaching $43 billion in 2011 (compared to $133.9 billion from DAC donors). However, these figures are just estimates – many emerging or private donors do not officially report their aid.

Between 2000 and 2010, the amount of global aid from all DAC donors grew by more than 60 percent. According to Davies, this was linked to the adoption of the Millennium Development Goals (MDGs), which led to “a much more effective narrative about the aims and achievements of aid.” This growth was also linked to the relative prosperity that prevailed in most of the OECD countries prior to the global financial crisis, which provided fertile ground for effective social campaigns in favour of aid, and to the terrorist attacks of September 11, which “led to a renewed focus on the geostrategic importance of aid”, he said.

As for the future, however, the Development Policy Centre says that it normally takes up to a decade for a country to recover from an economic crisis. This means that it is doubtful that the world will see another increase in global in the next few years.

“It appears likely aid will resume its downward trend in 2014, falling by perhaps a few percent per annum for several years,” Davies said.

Aid is not expected to return to its 2010 peak level until well after 2014.

If this happens, it is likely the level of funding allocated for short-term, discretionary purposes, such as emergency response, will fall, Davies said.

jl/aj/rz source

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Cutting Somalia’s remittance “lifeline”

Posted by African Press International on July 5, 2013

Somalia’s economy depends on remittances from abroad

NAIROBI,  – By withdrawing banking services from more than 250 money-transfer companies, Britain’s Barclays Bank risks severing an essential lifeline for millions of people in Somalia who depend on remittances from relatives in the UK, warn humanitarians, rights activists and academics.

For most of the remittance firms, the move is set to come into effect on 10 July, although an extension of 30 days has been granted to some of the companies.

Barclays said there was a risk that some of the firms might be “unwittingly facilitating money laundering and terrorist financing”.

Companies set to have their Barclays accounts shut down – effectively ending their UK operations – include one of Africa’s largest remittance firms, Dahabshiil. While countries other than Somalia may also be affected, ongoing humanitarian challenges in the nation and the absence of a formal banking system there mean that Barclays’ decision could have devastating consequences.

“A huge number of Somalis rely on remittances, which are estimated to be as much as US$1.2 billion every year – more than the entire humanitarian operation in the country,” Philippe Lazzarini, the UN’s top humanitarian official in Somalia, told IRIN. “It is not an overstatement to say this move will cut a lifeline for essential services in Somalia.”

Humanitarian fall-out

An “urgent appeal” to British Prime Minister David Cameron, issued on 1 July by 185 Somali civil society groups, said the move was likely to have “dire consequences” in Somalia “where no alternatives to the money service businesses exist.”

“We are seriously worried that without the services of these money transfer organizations, Somalis living in the diaspora throughout the UK… will not be able to send desperately needed support home to their relatives. This will have immediate and severe humanitarian implications,” the appeal added.

Four leading international aid and development NGOs have this week written privately to Barclays asking the bank to reconsider its decision, warning of significant humanitarian fall-out.

According to Senait Gebregziabher, Somalia country director at Oxfam and one of the signatories of the letter to Barclays, stopping the transfers would see many more Somali families “fall back into crisis”. Somalia is still recovering from a famine that killed some 260,000 people in 2011.

A report soon to be published by the NGOs Oxfam and Adeso estimates that members of the Somali diaspora in the UK send over 100 million pounds ($152.5 million) to Somalia every year.

These remittances are reportedly second in total value only to those sent back from the US.

Far-reaching effects

The NGOs’ research suggests that remittances account for around 60 percent of the recipients’ annual income, with money mostly being used to cover basic household expenses.

Mogadishu resident Halima Mohamed and her family depend entirely on financial support sent through money-transfer firms by her two sons in Britain and Denmark.

“My sons send $300 dollars each month, which we use to cover our basic needs like food, water and rent. Three of my children are at school, while one attends university, and we’ll find it hard to cope with the situation if Barclays proceeds with its decision,” she told IRIN.

Remittance firms serving Somalia have developed systems that help them operate in a country with no formal banking infrastructure. Using bank transfers where possible, the firms also use non-bank financial transfers based on trust and social solidarity, commonly known as ‘hawala’, meaning “transfer”. This system has become vital both for the delivery of support to families for business development. Aid groups rely on these systems as well.

Remittances account for more than a billion dollars every year

“While this suspension will not affect our local transfers, it is worth noting that the UN and many of the large relief and development organizations use hawala money transfers to pay their staff, procure assistance, and implement very successful emergency aid and poverty-relief programs such as cash-for-work,” the UN’s Dawn Blalock Goodwin told IRIN.


For Barclays, the question is one of compliance with international financial regulation and potential risk to the firm – both in terms of reputation and possible legal penalties from the US and other jurisdictions.

“As a global bank, we must comply with the rules and regulations in all the jurisdictions in which we operate. The risk of financial crime is an important regulatory concern, and we take our responsibilities in relation to this very seriously,” said Daniel Hunter, spokesperson for Barclays.

“It is recognized that some money service businesses don’t have the proper checks in place to spot criminal activity and could unwittingly be facilitating money laundering and terrorist financing.”

“Abuse of their services can have significant negative consequences for society and for us as their bank. We remain happy to serve companies who have strong anti-financial crime controls, but are asking the others to find another bank. This is solely about the company’s controls, not where they send money to,” he added.

The Barclays decision follows HSBC’s payment last December of a record $1.9 billion fine to settle accusations from US prosecutors that it had failed to implement anti-money laundering controls and allowed terrorists to move money around the financial system. The UK’s financial regulator also warned British banks on 1 July that they were not doing enough to protect against financial crime, saying they could face punishment for failing to spot abuses such as sanctions violations or terrorist funding.

In 2011, two Somali women in Minnesota were convicted of funnelling money to Al-Shabab militants using hawala brokers, and a Somali website, Sunatimes, has made allegations linking Dahabshiil to the Somali Islamists. Dahabshiil strenuously denies the claims and is taking the Somali journalist who runs the website to court.

Moving underground

But some argue the move by Barclays will shift legitimate transfers to murkier channels.

More than 100 academics and aid practitioners wrote to the British government last week to protest Barclays decision, warning that closing down money transfer channels “will only encourage people to send funds through illegal, unsafe, and untraceable channels, thereby potentially making the problem of support to proscribed parties much more serious”.

The view from Dadaab
While the threat to remittance flows into Somalia has provoked the greatest outcry, there is also concern about the impact on Somali refugees in neighbouring Kenya.

According to hawala companies operating in the 20-year-old Dadaab camp, which houses two-thirds of Kenya’s 500,000-strong Somali refugee population, more than a third of camp residents depend on remittances sent from abroad.

“What we receive from aid agencies is not enough, so if these remittances are closed or scaled down, our main source of support will be cut off,” Fatuma Mohamed Ali, a mother of eight who receives money from her relatives in the UK and Denmark, told IRIN. “I started a business with the money my daughter sent me.”

Refugees are not allowed to move out of the Dadaab complex, but many manage to run thriving businesses in the camp by using remittance money to contract people to buy goods for them in Garissa, Nairobi and Mombasa.

A Dahabshiil official, who did not want to be named, said: “In addition to the refugees, some of the aid agencies operating in Dadaab use our services, as the security situation make it difficult for them to carry cash around. Every month, we pay salaries to hundreds of staff as well as transfer other money to pay for agency operations. As you can, these hawala firms are a lifeline for the Dadaab camps.”

“We are regulated by the UK government. We are a licensed institution as is any other legal company,” Abdirashid Duale, CEO of Dahabshiil, told IRIN.

“Dahabshiil’s anti-financial crime controls are fully compliant with all applicable legal requirements and industry best practice and have been regularly audited by HMRC [the UK’s customs and tax department] for a number of years (on behalf of the FSA [Financial Services Authority]), without any adverse findings.”

“There is no other bank willing to open an account for us in the UK,” Omar Abdinur, managing director of Tawakal UK, another remittance firm affected by the decision, told IRIN.  “We have approached many banks but they are not willing. They say that money transfer is a risky business, but there is no single case in the UK where it has been proved that our firms are under-regulated or that we have transferred money to people under sanctions.”

Government response

Somali President Hassan Sheikh Mohamud has also called on Barclays to reverse its decision, stressing that the country is at a turning point “after two decades of chaos”.

“We understand Barclays’ corporate responsibility and its duty to its global customers to maintain a reputation for tackling financial crime, but that does not have to mean pulling the rug from under the feet of people battling extreme poverty – and before our fledgling government can step in to help,” he said in a statement last week.

Though faltering in its recovery – with some 10 percent of its population still reliant on humanitarian aid and violence ongoing in parts of the country – Somalia is seen as taking some steps in the right direction, a transition in which the UK is playing a key role.

In May, UK Prime Minister David Cameron, with President Hassan, hosted the second London Conference on Somalia, at which international donors pledged some $300 million in assistance.

But remittance flows to Somalia remain the country’s highest foreign exchange earner, and are a vital revenue stream. Any drop in remittances would throttle signs of economic recovery, analysts say.

“Somalia is almost entirely dependent on remittances, and if the closures come into effect, this could cause a humanitarian crisis as well as economic stagnation,” Somali economist Professor Yahye Amir told IRIN.

Extending the central bank’s reach and introducing banking regulation are among the government’s many priorities. Normal bank transfers, such as SWIFT, are not currently possible.

“Because Somalia’s crisis has been so prolonged, families have little ability to absorb shocks such as floods, droughts, disease outbreaks, displacement, a poor harvest or, in this case, an economic shock,” said the UN’s Lazzarini.

“The key thing to realize is that when humanitarian needs are assessed, remittances are already factored in. So a withdrawal or disruption of remittances will likely increase the number of vulnerable households or, for already vulnerable families, increase their need for humanitarian aid,” he said.

“With no formal banking systems as an alternative, we know from our experience on the ground that if remittances from the UK to Somalia were to be halted, many more families would fall back into crisis.”

The UK’s Foreign and Commonwealth Office (FCO) noted in a statement the “important role” played by remittances “in supporting the economy and people of Somalia”. But an FCO spokesperson also said that “Barclays’ decision is ultimately a private commercial matter”.

zf/am/rz source

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Everyone’s lives have to be transformed by growth

Posted by African Press International on June 2, 2013

Everyone’s lives have to be transformed by growth

JOHANNESBURG,  – After nine months of consultations, the UN High Level Panel on determining the world’s post-2015 development agenda has issued a report calling for a path to sustainable development which will transform the lives of the very poorest.

Set up by UN Secretary-General Ban Ki-moon and co-chaired by Indonesian President Susilo Bambang Yudhoyono, Liberian President Ellen Johnson Sirleaf and UK Prime Minister David Cameron, it elaborates a vision of how the world should develop and grow after the expiry in 2015 of the Millennium Development Goals (MDGs).

While praising the achievements of the MDGs, the Panel said they had failed, among other things, to reach out to the very poorest and most excluded people; to highlight the devastating effects of conflict and violence on development; and promote sustainable patterns of consumption and production.

Spurred on by the central idea to eradicate poverty by 2030, the Panel also said development needed to be driven by five transformative shifts: Leave no one behind; put sustainable development at the core; transform economies for jobs and inclusive growth; build peace and effective, open and accountable institutions for all; forge a new global partnership.

“What is particularly encouraging is that it sticks its neck out and chooses priorities, instead of an all-inclusive menu that is virtually impossible to monitor, much less implement”

The Panel recommends that almost all targets should be set at the national, or even local, level to account for different starting points and contexts.

Better focused?

Debby Guha-Sapir, director of the Centre for Research on the Epidemiology of Disasters, told IRIN: “What is particularly encouraging is that it sticks its neck out and chooses priorities, instead of an all-inclusive menu that is virtually impossible to monitor, much less implement. The indicators listed are much more specific and better defined than the first phase of the MDGs and will therefore not only be actionable but also measurable. I was particularly heartened to note that comparable indicators, metrics and data are clearly mentioned which means we can look forward to more rigorous attention being paid for better data.”

On which topic the report’s executive summary calls for “a data revolution for sustainable development, with a new international initiative to improve the quality of statistics and information available to citizens. We should actively take advantage of new technology, crowdsourcing, and improved connectivity to empower people with information on the progress towards the targets.”

“Targets will only be considered `achieved’ if they are met for all relevant income and social groups.”

For instance, on setting a universal goal to eradicate poverty, the Panel suggests each country could set its own target to bring the number of people living on less than US$1.25 a day to zero and reduce by x percent the share of people living below that country’s 2015 national poverty line. Each country would also set a target to increase by x percent the share of women and men, communities and businesses with secure rights to land, property and other assets; cover x percent of people who are poor and vulnerable with social protection systems; build resilience and reduce deaths from natural disasters by x percent.

jk/cb source

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