The 57-nation Organization of Islamic Conference got underway Thursday, March 13, in Dakar and the conferees’ first order of business is to find a path to reduce poverty and attempt to reduce the divide between the rich and poor in their countries.
“What is important here is that [the 57 member states of] the OIC are amongst the richest and the poorest in the world,” said Senegalese Foreign Affairs Minister Cheikh Tidiane Gadio, according to a story by IRIN.
Tidiane Gadio explained that conferees won’t be looking for different ways to send charity – zakat – to poorer states, but want to create a new mechanism which Islamic states can donate to other countries. Presently, the OIC-sponsored anti-poverty fund first announced in May 2007 has only $2.6 billion of its $10 billion target.
Emphasis on Africa?
One reason for holding this summit in Senegal is to hope to put an emphasis on African development. “The holding of this summit in Senegal must be remembered as a landmark for [when Islamic countries started seriously getting involved in] Africa, just as the summit held in Malaysia [in October 2003] was a landmark for Asia,” he told IRIN.
In many ways, aid from Arab states resembles larger Western-country aid where a complex system of national and international agencies has been set up to disburse and oversee the assistance. One could make the argument that Arab aid – or Muslim world aid – is a largely parallel structure of Western aid, especially when taking into account multilateral aid from the World Bank and International Monetary Fund. (Although the major Arab donors are members of Bretton Woods institutions.)
Bilateral loans make up the bulk of aid from the Gulf States, which often come at the detriment of the both Western and Arab-based multilaterals and regional aid institutions. A large share of these bilateral loans is channeled to other Arab countries, according to a study from the Chr. Michelsen Institute in Bergen, Norway. Yet the funds to Arab states – mostly Egypt, Morocco and Syria – have recently been dropping in proportion to other states like Sudan, Bangladesh and Pakistan.
Up until 2005, only 15.5 percent of Arab financial aid went to sub-Saharan Africa, while Asia received 23 percent. The countries of Senegal, Mali and Guinea have received a greater share than other African states south of the Sahara. This is the opposite for Western Countries, which spread aid more thoroughly around the continent.
The largest three Gulf State lenders – Saudi Arabia, Kuwait and United Arab Emirates – primarily disburse funds through the states’ finance ministries, making them the most important aid institutions in the region. On the other hand, the Muslim world’s smaller donors like Libya, Algeria and Qatar do not have national aid offices. They prefer to channel money through multilateral groups. It should be noted that Saudi – by far the Gulf State’s most benevolent donor – and Kuwait are among the nations that give the most Official Development Assistance in the world.
While Western government donors may trumpet good governance and economic conditionality as a precondition to receiving aid, the Arab states, like the Chinese, are not very interested in a recipient’s governmental or economic affairs. However, Arab donors do focus on corruption, perhaps as a way to increase efficacy of their investments (and boost the chance the recipient country will pay them back). It should be noted that recipient countries who receive harsh conditions from multilateral lenders like the World Bank have often turned to the Arab world for money.
The Arab countries have also created multilateral organizations to increase the flow of money, like the Arab Fund or the Islamic Development Bank, which can only lend to OIC members. Like the World Bank, these multilaterals lenders have been criticized in the past for a lack of transparency, but (like the World Bank) have moved to make their decisions and work more open to the public. (The finance ministries of Saudi Arabia, Kuwait and U.A.E. have been tightlipped about the amount of aid and donors.)
Finally, like Western-style aid, Arab donors are interested in supporting their own commercial interests, especially as the Arab world has developed a larger manufacturing base.
The prospectus
The underlying issue with Arab benevolence is its volatility, which often follows the ebbs and flows of the world price of oil.
Another aspect of Arab aid is its emphasis on infrastructure like transport, energy and telecommunications, according to a story (from 1979) on Saudi Aramco World magazine. In more developed countries, investors search for businesses ties or the chance to build factories. In countries where infrastructure is poor, Arab states try to steer away from more Western-style “prestige projects,” instead focusing on practical ventures that help the countries develop themselves.
Examples of these projects include building airport terminals (in hopes of increasing tourist trade) in Lesotho, or Gambia, Guinea-Bissau and Tunisia. Dams are also popular, like hydroelectric projects in Cameroon and Ghana and a dam in Mali. Roads have been built in Rwanda, Senegal, Somalia and the Congo. The Kuwaitis built a sugar factor in Tanzania.
Looking at the list, and pointed out in a study by Eric Neumayer published in World Economy, is that in sub-Saharan Africa, Arab states tend to focus on middle-income countries, rather than spending a lot on the very poorest countries. (Niger is a classic example.) However, one complaint about Arab aid is that it doesn’t do much to alleviate poverty, which is a current a cause célèbre (literally) in the West. In fact, stand-alone social projects were pretty much ignored by Arab philanthropists until about a decade ago.
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