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Nigeria was the first country to "benefit" from the IMF's policy support instrument (PSI) (a non-lending instrument which began in mid-2005, see Update 48), to which reform of the power sector is central. The PSI was central to the cancellation of Nigeria's foreign debt with the Paris Club in 2005, which needed IMF endorsement for the deal to go ahead. Former finance minister Ngozi Okonjo-Iweala, now managing director of the World Bank played a key role in the agreement.

key ingredients of the IMF's PSI were controversially passed during president Obasanjo's last few days in office, leading to a national strike in June 2007. These included the sale of the Kaduna and Port Harcourt oil refineries; the sale of the Egbin power station and other national assets; an increase in the cost of petroleum products; an increase in value added tax; and the non-implementation of the 15 per cent increase in civil service salaries.

The sale of the Eleme Petrochemicals plant, in Port Harcourt, was a structural reform of the PSI in October 2005. The plant is the largest of its kind on the continent. National newspapers report that it was sold for approximately $225 million to the Nigerian subsidiary of the Indonesian firm, Indorama Group. The National Union of Petroleum and Natural Gas Workers described this amount as "not worth the spare parts available at the plant".⁴

The World Bank funded the implementation of the bill for the implementation of the Nigerian Extractive Industries Transparency Initiative (NEITI). NEITI is central to the energy question in Nigeria, particularly in light of the failure to channel massive oil and gas revenues to for the benefit of national development. NEITI was developed together with the procurement bill and the freedom of information bill. However, in the event only NEITI was approved by both the Senate of the National Assembly and the House of Representatives, and with a significant amendment. This appeared without explanation, at the last minute and allows much greater leeway to oil companies over the issue of disclosure. To the provision on the power of NEITI to obtain information from companies' volume of sales of oil, gas and other minerals extracted was added the caveat that "provided that such information shall not be used in any manner prejudicial to the contractual obligation of proprietary interests of the extractive industry company". According to the Civil Society Legislative Advocacy Centre, these clauses have the potential "to defeat the entire essence of the transparency campaign in the extractive industry". Despite this blatant violation of both due process and disclosure, the IMF praised the NEITI bill as "good progress in efforts to improve governance and reduce corruption". The bill was passed by the Nigerian Senate in May 2007, days before the end of Obasanjo's tenure.

The Paris Declaration and the debate on aid effectiveness must first be placed in its proper conceptual and historical context. The origins of the debate lie in the concept of ‘failed states’ that in the 1990s became a common explanation for ‘crisis’ in large parts of the South. Theorists, largely in the US and Europe, argued that failed states were at the root of global instability and terrorism. They had lost their legitimacy and credibility, giving the North the right to intervene in order to reshape them as democratic states that would no longer pose a threat to the rest of the civilised world.

Robert Cooper, for example, described a zone of the ‘pre-modern world, the pre-state’, which was in a condition of ‘post-imperial chaos’: ‘

Cooper, an English version of the American neo-Conservatives, might have been ignored had not some of his ideas been given a boost a year later by Martin Wolf, a respected columnist for the Financial Times. In an article entitled ‘The need for a new imperialism’ [2], Wolf argued that Afghanistan was but an extreme example of a ‘failed state’.

Many in the South condemned the idea of failed states as a Northern pretext for intervention [3]. In the North, too, some were alarmed at this new-found justification for imperial or neo-imperial intervention in their name. Others were sceptical about Bush and Blair’s grandiose plans to ‘save Africa’. As a rejoinder to the idea that accelerated aid would (or could) make Africa’s poverty history, William Easterly, formerly of the World Bank, argued that top-down, donor-driven aid does not work [4], and that aid can only play a supportive role to essentially domestic efforts. Stephen Browne emphasised aid’s inadequate market signals and the way in which donor domination distorts supply and demand [5]. Roger Riddell showed how short-term political interests distort aid [6], and argued that the aid industry must change radically to become the effective force for good that it is often claimed to be.

Perhaps Bono and Sachs are honest advocates of aid, believing that the rich have a responsibility to help the poor. They do not ask if the rich had anything to do with creating poverty in the first place, but their good faith is best not questioned; they are artists and academics, not politicians, spreading the good word about humanity and humanitarianism. Bush and Blair, however, are in another camp altogether. They are in the category of people that Roger Riddell argues distort the purpose of aid because they have a political agenda, whether hidden or explicit. Their political track record suggests that they share Robert Cooper and Martin Wolf’s belief in defensive imperialism. Like their 19th century ancestors Bush and Blair are driven by a kind of missionary zeal to civilise the South and reorder it, to make it safe for democracy and ‘more like us’. Both soft and hard power are needed. Aid, from this perspective, becomes another weapon in their arsenal to discipline chaotic parts of the world. It follows that it would be irresponsible to give aid without conditions.

The OECD took the lead to reform the aid architecture. In 2003, at an intergovernmental High Level Forum (HLF) in Rome convened by the OECD’s Development Cooperation Directorate, Northern donors discussed how to make aid more effective. In March 2005, at the second High Level Forum, the OECD adopted the so-called Paris Declaration, which aims to take ‘far-reaching and monitorable actions to reform the ways we deliver and manage aid’.

On its website the OECD’s Development Assistance Committee (DAC) gives three reasons why the Paris Declaration will improve aid effectiveness. First, it goes beyond a statement of general principles; it lays down a ‘practical, action-orientated roadmap to improve the quality of aid and its impact on development’. Second, it sets out 12 indicators for monitoring and ‘encouraging progress’ against partnership commitments. Third, it promotes a model of partnership that will improve transparency and accountability in the use of development resources. At international level it provides a mechanism for donors and recipients of aid to hold each other mutually accountable and publicly monitor compliance. At country level it encourages joint assessment of progress by donors and partners using local instruments.

The most critical analysis of the Paris Declaration has come from a study by Roberto Bissio of Social Watch for the UN Human Rights Council's High-Level Task Force on the Implementation of the Right to Development. Bissio argues that relatively minor gains in efficiency and the reduction of some transaction costs are overridden by the asymmetrical conditions under which negotiations between donors and recipients take place. He adds that the Paris Declaration ‘creates a new level of supranational economic governance above the World Bank and the regional development banks’[8].

the OECD has now sought to bring the UN into the Paris Declaration process. Why should this be a matter for concern? The UN`s early involvement could have been a positive step in reforming the global aid architecture, but the OECD apparently preferred to place its trust in the Bretton Woods Institutions. It now seems that the OECD’s directorate has belatedly become aware of the World Bank and IMF’s democratic deficit, and of the need to involve the UN to provide a veneer of legitimacy.

the OECD-DAC has embraced the UN’s Development Cooperation Forum (DCF) initiative.

There is a shift from project lending to programme-based lending, which involves the pooling of donor resources and the injection of these funds into the national budget through direct budget support.

Recent World Bank documents show that in Poverty Reduction Strategy assessments undertaken by the World Bank, ‘few of them provide the level of operational detail that specifies how objectives are to be achieved through policy actions’. [12] Growth is apparently much lower than expected by the donor community. If this is still the case in 2010, the implication is that donors will demand better performance from recipient countries or they might stop aid.

The conclusion is unavoidable. Under the pretext of making aid more effective, the aid effectiveness project is a form of collective colonialism by Northern donors of those Southern countries that, through weakness, vulnerability or psychological dependency, allow themselves to be subjected to it at the Accra conference in September.

Can the Paris Declaration be salvaged? Yes, it can. In order to give it legitimacy and credibility, the following steps are necessary.

1. The Paris Declaration must be properly embedded in the UN system.

2. Meanwhile, there must be a moratorium on the Accra process and the proposed Accra Action Agenda.

3. The Paris Declaration must distance itself from the Bretton Woods institutions or it will suffer the same credibility and legitimacy gap.

4. The principle of mutual accountability must be properly structured and monitored by a UN body.

5. Finally, aid is not the route to development. It creates dependency and erodes self-reliance.