The Failings of Global Aid- is it Time to Make Charity History?

Walking by a lake you see a child drowning. There is no one else around- what should you do? The clear moral answer is to jump in and pull the child out without sparing a thought for potential inconvenience. It has long been argued that the same moral reasoning applies to world poverty- we must intervene to help the world’s poorest. The widely held view is that this help should be aid.  But does sending aid make the difference it is supposed to- what if we were offering our metaphorical child little more than a faulty life ring? Or worse still- is our aid merely dragging her down?

I came across a few articles this week about the money sent by wealthy countries to poor to assist development. The verdict wasn’t good. One was an article in Thursday’s Guardian showing how Somaliland, unable to receive international aid for legal reasons, had become more democratic and, ultimately, wealthy as a result. The other was a report by New York University (NYU) which found that billions of dollars of US military aid sent to Columbia had only worsened drug problems there. Depressingly, the articles argued, it seems that aid just doesn’t work.

This isn’t a popular idea, or an obvious one. Ireland especially is renowned for the difference its international assistance makes to the world’s poorest countries. Untainted with the guilt of empire (unlike Britain) and unconcerned with promoting ulterior political or economic goals (unlike the US) Ireland has been uniquely free to focus its development program on simply making a difference to those who need it most. The Irish aid budget is over 600 million euro per year and outside of government, Ireland is home to many large aid organisations such as Concern and Trocaire, working in dozens of countries worldwide. For a once poor country, this has been a source of pride for many.

But could this pride be misplaced? I want to discuss here the arguments against aid- the belief that poor countries are actually much better off without our financial support. This is obviously controversial, not least in the midst of a famine in Somalia and a global financial downturn that has hit the poorest the hardest. But if aid is in fact hurting these countries, this is an important debate to be had. The charges made by the sceptics against aid can be summarised as follows- removing democratic accountability, killing exports and rewarding tyrants.

Removing Accountability

America was founded on the principle of ‘No taxation without representation’; in international development the reverse is equally true- no representation without taxation. If poor countries become dependent on wealthier ones for providing basic services instead of taking taxes from individuals and local businesses, the need to remain accountable to one’s citizens is reduced and corruption and inefficiencies sink in. Somaliland provides an excellent example of this- it was forced into democratic reforms when port companies refused to pay taxes. Aid money would have significantly reduced the clout of these merchants.

Dutch Disease

Dutch Disease is a phenomenon named after the discovery of oil in Holland in the 1950s. The sudden influx of foreign money pushed up the relative value of local currency, devastating the country’s manufacturing industry, which had relied on exports. The same can occur with aid, which is also a sudden influx of foreign money. Exporting has been the key to growth for so many booming countries such as China, India, Japan and South Korea- aid may well keep this opportunity away from its recipients, damning them to poverty.

Rewarding Tyrants

Many of the world’s poorest countries also have the most reprehensible leaders and yet still receive aid. Mugabe’s Zimbabwe is a clear example of this, with aid essentially keeping the regime afloat. According to Professor Paul Collier, director of the Centre for the Study of African Economies at Oxford University, as much as 40% of African military spending is funded accidentally by aid.

This week’s NYU report found that US military aid found its way into the hands of the very drug barons they were targeting, due to corruption.

These are powerful arguments- aid can make a country less democratic, less competitive and more violent. Of course it is hard to argue against aid for emergency relief during a famine or earthquake but the larger argument that aid provides a clear path for a poor country’s economic development seems shaky at best. It seems clear that aid, as it is, is not working. The question for Ireland and the rest of the world is- will we continue dodging difficult questions or can real reform take place? Or is reform not enough; is now the time to make charity history?

 

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  • FuturePhysicist

    So no aid during the Great Famine was good for the Irish economy as it punished the tyranical landlord despots, helped the agriculutral food based economy, and left governance more accountable to the people. No money was ever contributed to this nation to ensure its soverignty, industry or trade during its development?

    Sorry Lassier Faire capitalism doesn’t remove despots, build economies or promote trade or democracy, and the Irish psyche has no tollerance for believing otherwise.

  • Neil

    It’s an interesting post. In a way it’s true, I was surprised to hear a Somali woman standing amongst the tents at the refugee camp saying aid should be stopped as many people had made temporary camps from famines past their permanent homes. They had no motivation to do anything other than hang around waiting for the aid workers to feed them.

    Personally I would suggest that there are different types of aid for different types of situation. When there’s a severe drought, a famine starts or some disaster befalls a country (be they rich or poor) we should be on hand to help.

    If I donate a fiver and it pays for one bottle of water, or one bowl of food for a dying child (or adult) then I’m happy. If some thieving scumbag over there helps himself to my fiver then I’m little worse off, arguably better than the thief who has to lose a little more humanity by stealing food from a dying person.

    The question has to be framed (IMO) in the context of when it stops being emergency/disaster relief and starts creating a dependency that causes people to give up on the struggle of life and settle down to a permanent life in what’s supposed to be a temporary camp.

  • Nunoftheabove

    “as 40% of African military spending is funded accidentally by aid”.

    What’s accidental about it ? If what you/they mean is that it is spent on military aid contrary to the purposes for which it was donated and to the intended end usage – i.e. presumably not on military gear – then that’s fine. or are donors really actually that daft ?

  • SethS

    Paul Collier’s 2008 book “The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It” (and no doubt others) makes much the same argument (in much more detail) that a lot of aid does little to improve the lot of most (other than the white middle classes on cushy numbers in aid agencies).

    I don’t totally buy the argument but its hard to argue that aid is all that effective.

    However lumping “aid” into one category is not really very helpful. Aid in a crisis can undoubtedly save lives in teh short term, but a lot of the problems above occur when this becomes long term.

    Like it or not the surest way of getting people out of poverty is to provide people with the means to support themselves be it faming or other jobs. Targetted aid can provide a boost to some of these areas.

    Although not mentioned here, Collier also attacks “Fair Trade” as a fantasy that simply keeps people poor. His argument is that country’s cannot create wealth by exporting primary products – the value is in processing those products (An argument frequently made in relation to Ireland and particularly its fishing industry). Whilst I agree to a certain extent, you can also argue that someone has to produce primary products and at least they should get a fair price for them. In this case aid that allowed producers to carry out more value added processing could help reduce poverty.

    As I recall ( I read the book a while back) one of the other issues raised is that aid agencies like to carry out “headline” aid projects which provide them with publicity and help boost donations. Inevitably these are short term where “results” can be shown. Long term investment just isn’t as sexy.

  • SethS

    And another thing, the advice if you see someone drowning is NOT to jump in and save them but to try and get them out without putting yourself at risk.

  • Clanky

    Where aid does work is in relieving suffering during temporary events like floods, droughts, famines, etc. Where the system has gone so horribly wrong is that we are piling billions upon billions of aid into third world countries on a regular basis.

    You only have to look at the vast sums of money which have been ploughed into Africa by governments and charities over the last 30-40 years, if that sort of aid worked then the problems would be solved by now, instead we are artificially allowing population growth to a level where the land is unable to support the number of people there and causing further reliance on aid.

  • andnowwhat

    The answer to the hypothetical drowning scenario was long ago answered

    http://www.youtube.com/watch?v=Sg6IVUvVsAs

    Re. aid being used for other issues, there’s plenty of places that the British and american government give aid to that they know full well what happens to some (at least) of the money.

  • @FuturePhysicist “So no aid during the Great Famine was good”. Nope. Which is why I said “Of course it is hard to argue against aid for emergency relief during a famine or earthquake but the larger argument that aid provides a clear path for a poor country’s economic development seems shaky at best”.

    @everyone else- some good comments here. I would agree that we shouldn’t give up altogether, the stated purpose of the article was to explore arguments against non- emergency aid which don’t really get the attention they should.

    @SethS Collier’s book is great, I reviewed it in my blog- http://rorysfindings.blogspot.com/2011/06/bottom-billion-review.html

    Some other great books would be The White Man’s Burden and Poor Economics, arguing different sides. The classic pro- aid book is Sach’s The End of Poverty but IMO it’s not a great read.

  • alan56

    Aid in an emergency situation and for a short time can save lives and relieve suffering. Long term though it just creates its own ‘industry’ and a dependency culture which becomes destructive. Often media visits are fully paid for by aid agencies in a fight for publicity. the whole thing can become quite horrible to witness

  • I will start by putting to rest an incorrect assumption made in the articles and comments. Africa is not a basket case. Things do get better.

    One year ago Africa Renewal published an issue covering the 50 years since independence. In the article, A half century of change you can see that on nearly every indicator, things are better for Africans now than they were 50 years ago. GDP is up, immunization up, child mortality down, cereal yields/ha are 75% better, school enrolment has doubled, …

    Unfortunately, the news we see about Africa is as biased as news on Northern Ireland outside the British Isles. We get shown the bad, not often the good. Famines and floods, wars and disease are the stuff of news reporting. Not new industries created by Africans with a bit of external know-how.

    For example, each year 250,000 charcoal stoves are made in Kenya by artisans who cut up old oil drums. The Kenya Ceramic Jiko burns 1/3rd less charcoal than traditional stoves, reducing deforestation hundreds of km around the cities. In the poorest parts of Nairobi, people spend 1/3rd of their income on charcoal for cooking – so the KCJ pays for itself in 2 months. A good stove will last two years. One of my last bits of work at the Kenyatta University Appropriate Technology Centre was doing tests on the ceramic liners to find out why some broke in 3 months.

    I would put emergency aid as necessary, but having the least impact on poverty. Rather than giving people fish and maize, teach them to fish, to mix maize and trees in the same fields, and use solar driers to better preserve the maize.