UN says one agency should handle African 'Marshall Plan'

A United Nations agency has launched a bold and controversial initiative to streamline development aid by calling for funds released by the doubling of aid to Africa to be channelled through the UN.

Proposed reforms would rationalise the existing complex distribution system of aid by setting up a UN fund for Africa, and challenge the 50-year supremacy of such institutions as the World Bank.

A report by the UN Conference on Trade and Development (Unctad) said: "The sheer multiplicity of donors, with different outlooks, accounting systems and priorities have created a landscape of aid that, at best, can only be described as chaotic."

It also criticises the politicisation of aid programmes, duplication and fragmentation, the high administrative costs of delivering aid, and the restrictive conditions of donor countries.

The report said the huge quantities of aid that will be flowing to Africa as a result of last year's Gleneagles summit, when the Group of Eight leaders vowed to double aid with an extra $48bn (£25bn) a year by 2010, should be delivered coherently through a single multilateral channel. The World Bank and International Monetary Fund "have not lived up to expectations and are not suited to administering doubled aid", Unctad said in the report, entitled Doubling Aid: Making the 'big push' work.

The doubling of aid alone will not be enough to achieve lasting reductions in poverty in Africa, according to Unctad, which insists development aid should be distributed according to each nation's needs, rather than according to the competing interests of donor nations.

But while Unctad's call for reform was generally welcomed, the conclusion of the report, concerning a UN-administered fund which would be free of "ideological biases and political pressures", was not. The proposals received a swift thumbs-down from the British Government and are expected to be rejected by the US.

A spokesman for Hilary Benn, the Secretary of State for International Development,said although Britain agreed the system could be reformed, "we do not agree a new UN fund is needed or justified. Improving existing mechanisms will be a better way to deliver increasing aid". Last week, Mr Benn led a successful revolt in Singapore against the anti-corruption strategy of the head of the World Bank, Paul Wolfowitz, arguing that developing countries should be supported by the Bank in tackling corruption, rather than have solutions imposed on them.

Patrick Watts, of ActionAid, said: "Aid flows should be more predictable and donors should not use aid to impose their own political or economic agenda. A new aid architecture is needed, but valuable progress can be made by harmonising procedures."

Alex Singleton, director-general of the Globalisation Institute, a London-based development think-tank, said "the UN should get rid of this megalomaniac agenda", and added that "this report will be forgotten a week from now" because it would not win US support. But the report's lead author, Richard Kozul-Wright, said lack of support from the US, which donates 13 per cent of aid to Africa, was not a criterion for stopping reform. "There is a general recognition by all donors that the system isn't working," he said.

The Unctad report compares the new aid flows for Africa to the post-war "Marshall Plan", an approach advocated by Tony Blair and Gordon Brown. "The Marshall Plan still stands as perhaps the most successful aid exercise in history," the report said.

Mr Kozul-Wright said that although Africa had received $600bn in aid since 1980, that amount was lower than aid channelled to Asia in the same period. He also said Ireland had received $400 per capita per annum after joining the EEC, and only $25 per capita had been awarded to African countries since the 1960s.