Combating poverty: the charade of development aid

Abstract

Scrap development aid as we know it and give the money to independent pro-poor aid organisations

Poverty is acknowledged to be the biggest risk for ill health worldwide. The World Health Organization estimates that about 1.2 billion people live in extreme poverty, without decent shelter, clean water, adequate sanitation, or sufficient food.¹ The response of the rich nations to global poverty has been to wave the magic wand of development aid, also known as “official development assistance,” which distinguishes it fromad hocassistance for emergencies such as natural disasters. Development aid is meant to help eradicate poverty through the stimulation of economic growth.

A total of $2.3 trillion (£1.1 trillion; €1.6 trillion) has been spent on development aid over past five decades, and it has been the subject of vigorous debate among development economists. Three books have emerged on the subject in the past two years—The Bottom Billion by Paul Collier, The White Man’s Burden by William Easterly, and The End of Poverty by Jeffrey Sacks.²,³,⁴ While each takes a different view of development aid, all share former US Treasury Secretary Paul O’Neal’s sigh of exasperation that, “We’ve spent trillions of dollars on these problems and we have damn near nothing to show for it.” Development aid has done next to nothing to help grow national economies or to lift people out of extreme poverty.

Collier blames the poverty stricken countries of the bottom billion of the world’s six billion population themselves for “falling behind and often falling apart, [who] co-exist with the twenty-first century, but [whose] reality is the fourteenth century: civil war, plague and ignorance.” He believes that for aid to be effective, these situations will need to be dealt with through national political reform, or even external intervention. Sachs disagrees and argues that the amount of money given in development aid is too small to have an effect. In 2002, development aid amounted to $30 for each sub-Saharan African; $18 of this sum was spent on donor country consultants, food aid, and debt repayments, leaving only $14 for direct aid.

Easterly contends that the entire aid set-up is fatally flawed, as donors largely lack evidence based knowledge of the situation on the ground in poor countries, or of how to make aid effective. The crux of the problem, he argues, is that “The status quo—large international bureaucracies giving aid to large national government bureaucracies—is not getting money to the poor.” Consequently, the poor are not getting the vaccines, the antibiotics, the bed nets, the doctors, or the nurses they need to improve their health. Tumwine observes in a recent BMJ editorial that “expenditure on health has not improved substantially [in poor countries], and hospital wards in these countries are best described as pathetic.”⁵

Some critical observations on development aid merit attention. Although aid is often equated with charity, in reality it is more about the political and economic self interest of the giver, with much of it being tied to the purchase of goods (including military ware) and services from the donor country.⁶ Development aid buys influence, with French and British aid largely going to their former colonies, and that of the US to Israel and Egypt. Development aid has not lived up to its promise of unleashing economic growth and, ironically, countries that have registered the most robust growth in recent years—such as India, China, and Botswana—were recipients of the least aid, and vice versa.

So, what should be done about development aid? Firstly, we must scrap the idea that development aid—as presently structured—is the best way to eradicate poverty. Development is a long term process that may not benefit the poor for generations. Poverty remains an enduring feature of life in India, China, and Botswana despite spectacular growth rates. Development is best achieved through national initiatives and good governance, coupled with equitable international trade arrangements (something the wealthy nations refuse to do at the World Trade Organization).

The needs of the poor are immediate and cry out for direct and urgent intervention now. International aid genuinely earmarked for eradicating poverty must be taken out of the hands of the politicians and bureaucracies of both donor countries and recipient countries. Such funds should be controlled by independent and accountable agencies, which have knowledge of the existing needs and have direct access to those in need. Aid must be contingent upon the accountability of those who administer it, feedback from those who benefit from it, and measurable or otherwise verifiable outcomes.

Oxfam International—a confederation of 13 organisations working together with over 3000 partners in more than 100 countries to find lasting solutions to poverty and injustice—is a good example of an agency not indentured to political patronage.⁷ Oxfam has a deep understanding of the complexities underpinning poverty, and it works for and with the poor to provide them with relief aid and to empower them to help themselves. Above all, Oxfam is able to “speak truth to power” in its advocacy for the poor.

Rich countries may still wish to coddle dictators and other regimes—malevolent or otherwise—with handouts intended to influence solidarity or security; just don’t call it development aid.