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Date: Thu, 15 Sep 2005 08:26:45 -0700
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Subject: Africa: Human Development Report


Africa: Human Development Report

AfricaFocus Bulletin
Sep 15, 2005 (050915)
(Reposted from sources cited below)

Editor's Note

Among the many reports issued as world leaders gather in New York
to discuss their commitment to fighting world poverty, the annual
Human Development Report is among the most blunt in concluding that
the "promise to the world's poor is being broken." In addition to
documenting the failures and presenting its annual measurement of
the Human Development Index (HDI) for 177 countries, this year's
report identifies specific actions that could begin to reverse the
trend.

This AfricaFocus Bulletin contains excerpts from the overview of
the 2005 Human Development Report, focused on inequality, aid, and
trade. The web version of this Bulletin, at
http://www.africafocus.org/docs05/hdr2005.php, also contains the
listing of the HDI rank of African and other countries The full
report, as well as a press kit and other background papers, is
available at http://hdr.undp.org/reports/global/2005

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Human Development Report 2005

United Nations Development Programme

Overview

[Excerpts only. Full text of overview and of full report available
at http://hdr.undp.org/reports/global/2005]

Five years ago, at the start of the new millennium, the world's
governments united to make a remarkable promise to the victims of
global poverty. Meeting at the United Nations, they signed the
Millennium Declaration a solemn pledge "to free our fellow men,
women and children from the abject and dehumanizing conditions of
extreme poverty". The declaration provides a bold vision rooted in
a shared commitment to universal human rights and social justice
and backed by clear time-bound targets. These targets the
Millennium Development Goals (MDGs) include halving extreme
poverty, cutting child deaths, providing all of the world's
children with an education, rolling back infectious disease and
forging a new global partnership to deliver results. The deadline
for delivery is 2015.

There is more to human development than the MDGs. But the goals
provide a crucial benchmark for measuring progress towards the
creation of a new, more just, less impoverished and less insecure
world order. ...

... Some important human development advances have been registered
since the Millennium Declaration was signed. Poverty has fallen and
social indicators have improved. The MDGs have provided a focal
point for international concern. ... Yet as governments prepare for
the 2005 UN summit, the overall report card on progress makes for
depressing reading. Most countries are off track for most of the
MDGs. Human development is faltering in some key areas, and already
deep inequalities are widening. Various diplomatic formulations and
polite terminology can be found to describe the divergence between
progress on human development and the ambition set out in the
Millennium Declaration. None of them should be allowed to obscure
a simple truth: the promise to the world's poor is being broken.

This year, 2005, marks a crossroads. The world's governments face
a choice. One option is to seize the moment and make 2005 the start
of a "decade for development". If the investments and the policies
needed to achieve the MDGs are put in place today, there is still
time to deliver on the promise of the Millennium Declaration. But
time is running out. ...The other option is to continue on a
business as usual basis and make 2005 the year in which the pledge
of the Millennium Declaration is broken. ... Instead of delivering
action, the UN summit could deliver another round of high-sounding
declarations, with rich countries offering more words and no
action.

...

Global integration is forging deeper interconnections between
countries. In economic terms the space between people and countries
is shrinking rapidly, as trade, technology and investment link all
countries in a web of interdependence. In human development terms
the space between countries is marked by deep and, in some cases,
widening inequalities in income and life chances. One-fifth of
humanity live in countries where many people think nothing of
spending $2 a day on a cappuccino. Another fifth of humanity
survive on less than $1 a day and live in countries where children
die for want of a simple anti-mosquito bednet.

At the start of the twenty-first century we live in a divided
world. The size of the divide poses a fundamental challenge to the
global human community. Part of that challenge is ethical and
moral. As Nelson Mandela put it in 2005: "Massive poverty and
obscene inequality are such terrible scourges of our times times in
which the world boasts breathtaking advances in science,
technology, industry and wealth accumulation that they have to rank
alongside slavery and apartheid as social evils."

Rich countries as well as poor have an interest in changing this
picture. ... Extending opportunities for people in poor countries
to lead long and healthy lives, to get their children a decent
education and to escape poverty will not diminish the well-being of
people in rich countries. On the contrary, it will help build
shared prosperity and strengthen our collective security. In our
interconnected world a future built on the foundations of mass
poverty in the midst of plenty is economically inefficient,
politically unsustainable and morally indefensible.

Debates about trends in global income distribution continue to
rage. Less open to debate is the sheer scale of inequality. The
world's richest 500 individuals have a combined income greater than
that of the poorest 416 million. Beyond these extremes, the 2.5
billion people living on less than $2 a day 40% of the world's
population account for 5% of global income. The richest 10%, almost
all of whom live in high-income countries, account for 54%.

Why inequality matters

Human development gaps within countries are as stark as the gaps
between countries. These gaps reflect unequal opportunity people
held back because of their gender, group identity, wealth or
location. Such inequalities are unjust. They are also economically
wasteful and socially destabilizing. Overcoming the structural
forces that create and perpetuate extreme inequality is one of the
most efficient routes for overcoming extreme poverty, enhancing the
welfare of society and accelerating progress towards the MDGs.

The MDGs themselves are a vital statement of international purpose
rooted in a commitment to basic human rights. These rights to
education, to gender equality, to survival in childhood and to a
decent standard of living are universal in nature. That is why
progress towards the MDGs should be for all people, regardless of
their household income, their gender or their location. However,
governments measure progress by reference to national averages.
These averages can obscure deep inequalities in progress rooted in
disparities based on wealth, gender, group identity and other
factors.

Income inequalities interact with other life chance inequalities.
Being born into a poor household diminishes life chances, in some
cases in a literal sense. Children born into the poorest 20% of
households in Ghana or Senegal are two to three times more likely
to die before age 5 than children born into the richest 20% of
households. Disadvantage tracks people through their lives. Poor
women are less likely to be educated and less likely to receive
antenatal care when they are pregnant. Their children are less
likely to survive and less likely to complete school, perpetuating
a cycle of deprivation that is transmitted across generations.
Basic life chance inequalities are not restricted to poor
countries. Health outcomes in the United States, the world's
richest country, reflect deep inequalities based on wealth and
race. Regional disparities are another source of inequality. Human
development fault lines separate rural from urban and poor from
rich regions of the same country. ...

More equitable income distribution would act as a strong catalyst
for accelerated poverty reduction. ... When it comes to income
poverty reduction, distribution matters as well as growth. That
conclusion holds as much for low-income countries as for
middle-income countries. Without improved income distribution
Sub-Saharan Africa would require implausibly high growth rates to
halve poverty by 2015. ...

International aid increasing the quantity, improving the quality

International aid is one of the most effective weapons in the war
against poverty. Today, that weapon is underused, inefficiently
targeted and in need of repair. Reforming the international aid
system is a fundamental requirement for getting back on track for
the MDGs.

Aid is sometimes thought of in rich countries as a one-way act of
charity. That view is misplaced. In a world of interconnected
threats and opportunities aid is an investment as well as a moral
imperative an investment in shared prosperity, collective security
and a common future. Failure to invest on a sufficient scale today
will generate costs tomorrow.

... There are three conditions for effective aid. First, it has to
be delivered in sufficient quantity to support human development
take-off. Aid provides governments with a resource for making the
multiple investments in health, education and economic
infrastructure needed to break cycles of deprivation and support
economic recovery and the resource needs to be commensurate with
the scale of the financing gap. Second, aid has to be delivered on
a predictable, low transaction cost, value for money basis. Third,
effective aid requires "country ownership". Developing countries
have primary responsibility for creating the conditions under which
aid can yield optimal results. While there has been progress in
increasing the quantity and improving the quality of aid, none of
these conditions has yet been met.

When the Millennium Declaration was signed, the development
assistance glass was three-quarters empty and leaking. During the
1990s aid budgets were subject to deep cuts, with per capita
assistance to Sub-Saharan Africa falling by one-third. Today, the
aid financing glass is approaching half full. The Monterrey
Conference on Financing for Development in 2001 marked the
beginning of a recovery in aid. Since Monterrey, aid has increased
by 4% a year in real terms, or $12 billion (in constant 2003
dollars). Rich countries collectively now spend 0.25% of their
gross national income (GNI) on aid lower than in 1990 but on an
upward trend since 1997. The European Union's commitment to reach
a 0.51% threshold by 2010 is especially encouraging.

However, even if projected increases are delivered in full, there
remains a large aid shortfall for financing the MDGs. That
shortfall will increase from $46 billion in 2006 to $52 billion in
2010. The financing gap is especially large for Sub-Saharan Africa,
where aid flows need to double over five years to meet the
estimated costs of achieving the MDGs.

  ...

While rich countries publicly acknowledge the importance of aid,
their actions so far have not matched their words. The G-8 includes
three countries Italy, the United States and Japan with the lowest
shares of aid in GNI among the 22 countries on the Organisation for
Economic Co-operation and Development's Development Assistance
Committee. On a more positive note the United States, the world's
largest aid donor, has increased aid by $8 billion since 2000 and
is now the world's largest donor to Sub-Saharan Africa. The setting
of more ambitious targets is another welcome development. However,
donors do not have a good record in acting on aid targets ... Since
1990 increased prosperity in rich countries has done little to
enhance generosity: per capita income has increased by $6,070,
while per capita aid has fallen by $1.

Just the increase in military spending since 2000, if devoted to
aid instead, would be sufficient to reach the long- standing UN
target of spending 0.7% of GNI on aid. ...Current spending on
HIV/AIDS, a disease that claims 3 million lives a year, represents
three day's worth of military spending.

Questions are sometimes raised about whether the MDGs are
affordable. Ultimately, what is affordable is a matter of political
priorities. But the investments needed are modest by the scale of
wealth in rich countries. The $7 billion needed annually over the
next decade to provide 2.6 billion people with access to clean
water is less than Europeans spend on perfume and less than
Americans spend on elective corrective surgery. This is for an
investment that would save an estimated 4,000 lives each day.

Tied aid remains one of the most egregious abuses of
poverty-focused development assistance. By linking development
assistance to the provision of supplies and services provided by
the donor country, instead of allowing aid recipients to use the
open market, aid tying reduces value for money. Many donors have
been reducing tied aid, but the practice remains widely prevalent
and underreported. We conservatively estimate the costs of tied aid
for lowincome countries at $5 $7 billion. Sub-Saharan Africa pays
a "tied aid tax" of $1.6 billion.

In some areas the "new partnership" in aid established at the
Monterrey conference still looks suspiciously like a repackaged
version of the old partnership. There is a continuing imbalance in
responsibilities and obligations. Aid recipients are required to
set targets for achieving the MDGs, to meet budget targets that are
monitored quarterly by the International Monetary Fund (IMF), to
comply with a bewildering array of conditions set by donors and to
deal with donor practices that raise transaction costs and reduce
the value of aid. Donors, for their part, do not set targets for
themselves. Instead, they offer broad, non-binding commitments on
aid quantity (most of which are subsequently ignored) and even
broader and vaguer commitments to improve aid quality. Unlike aid
recipients, donors can break commitments with impunity. In
practice, the new partnership has been a one-way street.

Donor countries need first to honour and then to build on the
commitments made at Monterrey. Among the key requirements:

* Set a schedule for achieving the aid to GNI ratio of 0.7% by 2015
(and keep to it). Donors should set budget commitments at a minimum
level of 0.5% for 2010 to bring the 2015 target within reach.

* Tackle unsustainable debt. The G-8 summit in 2005 produced a
major breakthrough on debt owed by the heavily indebted poor
countries (HIPCs). However, some problems remain, with a large
number of low-income countries still facing acute problems in
meeting debt service obligations. Final closure of the debt crisis
will require action to extend country coverage and to ensure that
debt repayments are held to levels consistent with MDG financing.

* Provide predictable, multiyear financing through government
programmes. Building on the principles set out in the Paris
Declaration on Aid Effectiveness, donors should set more ambitious
targets for providing stable aid flows, working through national
systems and building capacity. By 2010 at least 90% of aid should
be disbursed according to agreed schedules through annual or
multiyear frameworks.

* Streamline conditionality. Aid conditionality should focus on
fiduciary responsibility and the transparency of reporting through
national systems, with less emphasis on wide-ranging macroeconomic
targets and a stronger commitment to building institutions and
national capacity.

* End tied aid. There is a simple method for tackling the waste of
money associated with tied aid: stop it in 2006.

Trade and human development strengthening the links

Like aid, trade has the potential to be a powerful catalyst for
human development. ... The problem is that the human development
potential inherent in trade is diminished by a combination of
unfair rules and structural inequalities within and between
countries.

International trade has been one of the most powerful motors
driving globalization. Trade patterns have changed. There has been
a sustained increase in the share of developing countries in world
manufacturing exports and some countries are closing the technology
gap. However, structural inequalities have persisted and in some
cases widened. Sub-Saharan Africa has become increasingly
marginalized. Today, the region, with 689 million people, accounts
for a smaller share of world exports than Belgium, with 10 million
people. If Sub-Saharan Africa enjoyed the same share of world
exports as in 1980, the foreign exchange gain would represent about
eight times the aid it received in 2003. ...

Fairer trade rules would help, especially when it comes to market
access. In most forms of taxation a simple principle of graduation
applies: the more you earn, the more you pay. Rich country trade
policies flip this principle on its head. The world's highest trade
barriers are erected against some of its poorest countries: on
average the trade barriers faced by developing countries exporting
to rich countries are three to four times higher than those faced
by rich countries when they trade with each other. ...

Agriculture is a special concern. ... In the last round of world
trade negotiations rich countries promised to cut agricultural
subsidies. Since then, they have increased them. They now spend
just over $1 billion a year on aid for agriculture in poor
countries, and just under $1 billion a day subsidizing agricultural
overproduction at home - a less appropriate ordering of priorities
is difficult to imagine. ... Cotton farmers in Burkina Faso are
competing against US cotton producers who receive more than $4
billion a year in subsidies a sum that exceeds the total national
income of Burkina Faso. Meanwhile, the European Union's extravagant
Common Agricultural Policy (CAP) wreaks havoc in global sugar
markets, while denying developing countries access to European
markets. ...

In some areas WTO rules threaten to systematically reinforce the
disadvantages faced by developing countries and to further skew the
benefits of global integration towards developed countries. An
example is the set of rules limiting the scope for poor countries
to develop the active industrial and technology policies needed to
raise productivity and succeed in world markets. The current WTO
regime outlaws many of the policies that helped East Asian
countries make rapid advances. WTO rules on intellectual property
present a twin threat: they raise the cost of technology transfer
and, potentially, increase the prices of medicines, posing risks
for the public health of the poor. In the WTO negotiations on
services rich countries have sought to create investment
opportunities for companies in banking and insurance while limiting
opportunities for poor countries to export in an area of obvious
advantage: temporary transfers of labour. It is estimated that a
small increase in flows of skilled and unskilled labour could
generate more than $150 billion annually a far greater gain than
from liberalization in other areas.

The Doha Round of WTO negotiations provides an opportunity to start
aligning multilateral trade rules with a commitment to human
development and the MDGs. That opportunity has so far been wasted.
Four years into the talks and nothing of substance has been
achieved. ...

The WTO ministerial meeting planned for December 2005 provides an
opportunity to address some of the most pressing challenges. While
many of the issues are technical, the practical requirement is for
a framework under which WTO rules do more good and less harm for
human development. ...Among the key benchmarks for assessing the
outcome of the Doha Round:

* Deep cuts in rich country government support for agriculture and
a prohibition on export subsidies. Agricultural support, as
measured by the producer support estimates of the OECD, should be
cut to no more than 5% 10% of the value of production, with an
immediate prohibition on direct and indirect export subsidies.

* Deep cuts in barriers to developing country exports. Rich
countries should set their maximum tariffs on imports from
developing countries at no more than twice the level of their
average tariffs, or 5% 6%.

* Compensation for countries losing preferences. While rich country
preferences for some developing country imports deliver limited
benefits in the aggregate, their withdrawal has the potential to
cause high levels of unemployment and balance of payments shocks in
particular cases. A fund should be created to reduce the adjustment
costs facing vulnerable countries.

* Protection of the policy space for human development.
Multilateral rules should not impose obligations that are
inconsistent with national poverty reduction strategies. These
strategies should incorporate best international practices adapted
for local conditions and shaped though democratic and participative
political processes. In particular, the right of developing
countries to protect agricultural producers against unfair
competition from exports that are subsidized in rich countries
should be respected in WTO rules.

* A commitment to avoid "WTO plus" arrangements in regional trade
agreements. Some regional trade agreements impose obligations that
go beyond WTO rules, especially in areas such as investment and
intellectual property. It is important that these agreements not
override national policies developed in the context of poverty
reduction strategies.

* Refocusing of services negotiations on temporary movements of
labour. In the context of a development round less emphasis should
be placed on rapidly liberalizing financial sectors and more on
creating rules allowing workers from developing countries improved
access to labour markets in rich countries.

Violent conflict as a barrier to progress

[for text see http://hdr.undp.org/reports/global/2005]

*************************************************************
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.

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