The Liberal Democrats have a proud tradition of prioritising international development, but it is time to re-think our foreign aid strategy. All three parties’ manifestoes pledged to increase aid spending to 0.7 per cent of Gross National Income (GNI). This sounds very “nice” and positive, but the commitment bears no relation to the actual needs of developing countries and ignores the mounting evidence showing that the current system of aid is perpetuating the poverty it seeks to alleviate. If we are to be serious about helping the world’s poorest, we need to stop focusing upon what we want to give, and look at what has really worked in international development: domestic governments being accountable, and thus responding, to the needs of their populations. Sadly, much of our aid undermines this accountability.
The UK’s aid spending is currently around 0.5 per cent of GNI. Increasing it to 0.7 per cent will cost taxpayers an extra £2bn a year. DfID’s justification is that this morally right and that the generosity showed towards the victims of the Haiti disaster demonstrate a “long and proud tradition of helping people less fortunate than ourselves.”
Putting aside the issue of using input targets to measure outcomes (after all, it makes logical sense to appraise how much money is needed before deciding upon a target), this is a deliberate confusion of two separate issues: disaster-relief aid (humanitarian aid as we saw in Haiti) and bilateral assistance (government-to-government aid). In 2008/09 DfID spent just £449m on humanitarian aid out of a total budget of £5.8bn– just 13 per cent. The overwhelming majority of funds, some £5.1bn was used for government-to-government aid or donated through multilateral agencies, such as the EU Commission’s development programme. The largest single recipient was the Indian state, which received £297m.
DfID claims that this government-to-government aid spending is firmly in Britain’s “national interest”. Andrew Mitchell, Secretary of State for International Development, has recently announced that Pakistan is to become the largest single recipient by 2013. While it can be argued that that this makes geopolitical sense, it certainly blunts the moral imperative.
The reality is that government-to government aid has done very little to promote development over the last half century. Proponents of increasing foreign aid are quick to cite successful projects, where people have benefited from aid services, but these remain localised examples, not evidence of development. If they were, there would be no need for the aid to continue, let alone increase.
Partly, this is a fault of the aid system itself. Rather like serendipitous discoveries of high value natural resources, aid removes the accountability of politicians to their fiscal systems, allowing them to shirk their domestic responsibilities. Governments committed to improving domestic business conditions (Mauritius, Botswana, South Korea, Chile), which allow their people to trade their way out of poverty, have done so unilaterally, in recognition of the benefits–both fiscal and humanitarian–that ensue. Government-to-government aid flows reduce the incentive for recipient politicians to do this, by offering an alternative source of funding.
It’s hardly surprising that this policy is becoming increasingly unpopular with the British public: A recent Chatham House report showed 41 per cent of those polled felt that “much development assistance is wasted and does little or nothing to promote British interests; it should be radically reduced.”
The Liberal Democrats should distance themselves from the aid ring-fence. Aid is not a silver bullet to the developing world’s problems, and is now commonly criticised by African experts such as Dambisa Moyo and Andrew Mwenda. At its best it’s a short term fix for disaster relief, at worst it serves to perpetuate long-term cycles of poverty in the developing world. Far better to be seen to backtrack in the interests of the world’s poorest than to be complicit in a rotten piece of feel-good policy.
Timothy Cox is a Liberal Democrat reading a Masters in African Politics at SOAS, having previously worked for Norman Lamb. He also blogs at Liberal Vision.
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22 Comments
Very much agreed with the sentiment of the article.
How about the idea of using DfID budget to fund the creation of a peace-keeping and reconstruction force?
http://jedibeeftrix.wordpress.com/2010/07/08/warfighting-and-peacekeeping-%E2%80%93-an-idea-for-hagues-joined-up-foreign-policy/
The ‘Dead Aid’ argument really doesn’t stack up. It’s Reaganomics for Africa – instead of receiving Aid African countries would only raise commerical loans from investors and repay these. The argument goes on that because the lenders will only lend to responsible countries, this will force the countries to be responsible, whereas Aid doesn’t.
The rather glaring flaw in the argument is that the governments she sees diverting aid for personal benefit, would somehow not divert the loans for personal benefit and run away before they were due to be paid back.
The other glaring flaws are:
1. The current worldwide boom in commodity prices gives African countries the means to repay loans, however should the prices collapse as happened in the 1970s they would default on their debt as happened in the 1970s (when commodity prices fell after the oil price hike)
2. There is a global credit crunch right now. If lenders are unwilling to lend to Greece or Portugal and, if we are to believe Nick, were on the verge of not lending to the UK then the chances of them lending to Burkina Faso or Uganda aren’t hot.
Whilst Moyo has a point that African countries borrowing can be useful. I think this should be complementary to aid.
Other parts of her argument are useful: support to micro-credit, removing trade barriers and agricultural subsidies, stop dumping agricultural surplus.
As LibDems we need to make sure that aid is effective, without swallowing this unbridled free market tosh wholesale. There will be enough pressure from some of our partners in the blue corner to turn aid into the old-fashioned tory ways of building dams in Indonesia and diverting it to support military activities.
I agree very much with the criticism of government-to-government aid, but there are other potentially useful ways that the DfID budget could be spent – not just for peacekeeping (see above comment) or disaster response (which is still vitally important). How about providing seed-money to fund the development of cheap technologies to help the poor, such as clean-burning stoves and lamps, water purification devices and cheap and clean local power generation? Or funding research into tropical diseases that have been largely neglected by pharmaceutical companies because their victims are usually too poor to risk developing drugs for?
More broadly, I’d like to put a cat among the pigeons: the best way for rich countries to support development around the world is to allow more economic migration. Remittances already exceed offical aid flows, and unlike them always go directly to families and communities and are spent on improving lives.
While government aid or charitable giving is a transfer (if I give £20 to Oxfam’s Pakistan floods appeal, I am £20 worse off and a homeless family in Pakistan gets £20 worth of clean water or tarpaulins), migration (like trade) creates a gain for both sides, since (for example) a Kenyan worker is seven times more productive in the UK than in Kenya (thanks to better infrastructure, more capital and so on).
In 2005 the World Bank estimated that if the 30 rich members of the OECD allowed a 3% increase in their labour forces from increased economic immigration, citizens of poor countries would gain about $300 billion, while the OECD countries would gain $51 billion (not to mention securing themselves against imminent demographic pressures on pensions and healthcare). (Source: see previous link.) That compares very unfavourably with the current policy of $70 billion of foreign aid from rich to poor countries, which (even assuming no sticky-fingered politicians in the way) enriches poor countries by precisely as much as rich countries lose.
As the Chair of the Liberal Youth of Sweden (who support free migration partly on the back of the above article) says, “The question of aid pales and becomes almost pathetic compared with the importance of pushing for a liberal migration policy.”
P.S. His post (mostly in Swedish) is here: http://adam.luf.se/2010/05/skit-i-bistandet-en-stund.html
@CowleyJon: I don’t think that Mr Cox’s post is based entirely on Dambisa Moyo’s ideas, but he’s the best person to respond to that.
For myself I’d like to point out that (as far as I know) countries like Botswana, South Korea, Chile and Mauritius did not borrow large amounts of money (either as states or through their companies) during their development; it was the result of openness to trade and sensible domestic economic policy (which has in Chile’s case included social democratic support for the poor ever since the restoration of democracy, without hampering economic growth).
On scrapping CAP and other distortionary agricultural policies I say Amen, likewise to removing trade barriers. And as I said in my first comment, there are plenty of better development-related uses for aid money than government-to-government aid, and I personally don’t think that the DfID budget should be cut.
This article doesn’t stack up in a lot of ways.
The most obvious, is that you don’t cite any evidence for the assertion that ‘aid has often made things worse’. Citing Dambisa Moyo isn’t good enough, because she doesn’t cite any actual evidence either, and makes some pretty dubious comparisons, like talking about US government aid to Mobutu during the cold war and using that to argue that aid fuels corruption and makes things worse. Whereas in fact, what this tells us, is that *if* you give aid based on political imperitives (the cold war) with no consideration for issues like corruption, it *can* fuel corruption and make things worse. There are a lot of reviews of the book from people who know aid who make similar arguments – do some googling. That isn’t to say there aren’t criticisms to be made in how aid is done and allocated (e.g. should Pakistan really be our largest recipient), but to say that ‘it doesn’t work, makes things worse, stop it all’, is a bit throwing the baby out with the bathwater.
Also, looking at your numbers, I don’t really understand what the point you’re making is. There’s a big difference between budget support given straight to governments and aid given through multilateral agencies:
– Budget Support was a strategic decision taken by DFID several years ago as they felt it was more efficient and effective in building up the state capacity of recipient countries. Disagreeing with this (many do, I’m on the fence) as a strategy should lead to discussion of whether there are better alternatives (more project-based support, for example), not suggestions to stop doing aid.
– Giving aid through multilateral agencies is recognised good practices, because one of the big problems in aid is coordination between different donor agencies. Giving money through the EU or World Bank avoids this problem. So I don’t understand why this is an argument to reduce aid, unless there’s a deeper argument about the EU/World Bank/etc
Also, when you set up the figures, did you include money to UN OCHA consolidated appeals for emergencies under emergency relief, or under money to multilateral agencies?
Also, where does money as grants to NGOs to implement projects come in? Is that the last few million that aren’t accounted for by humanitarian assistance or is that part of the grants to multilateral agencies money? A lot of this goes through the EU (which is better for NGOs as it means they have to deal with fewer donors, all of which have different reporting procedures and which can impose a huge admin burden on NGOs), but not all.
Lastly, I don’t see any inherent contradiction between public generosity to e.g. Haiti and ‘only’ 13% of the budget going to emergencies. Bear in mind that there aren’t that many emergencies ongoing at any one time (although more than people think, most of them never reaching the news), and that poverty kills far more than emergencies do, it seems to me that they *should* be spending most of their money on development, especially given that development work requires long-term, stable funding, something that development agencies are much better at than philanthropy.
Dang, the faster typers beat me to it!
@CowleyJon – much better criticism of Dead Aid than I managed, thanks!
@Niklas, also really agree. There’s a great post by Owen Barder, at http://www.owen.org/blog/3423, that makes some of the arguments that you make, essentially that one thing that would really contribute to more effective development would be if rich countries stopped thinking of development aid as fulfilling their obligations to poor countries while merrily screwing them over elsewhere, and started considering the impact of their policies as a whole on poor countries, including things like the CAP and migration, on which I wholly agree with you.
I think one of the challenges for us as liberals is that finding a ‘liberal’ approach to international development is actually pretty difficult. Surely everyone wants the same thing – poor people to become richer. I think this emphasis on gearing our wider policy towards development may be part of the answer. But it’s also hard to know what to do about budget support – done well, it fits with our belief in devolving decision-making and promoting local accountability, done badly it’s a waste of time… I think this is the discussion we should be having, rather than whether aid works at all.
Another article by Barder – ‘an open letter to aid sceptics’ on p. 21 of this file http://www.ia-forum.org/Files/ForumReport%20Spring2010%20Africa.pdf puts forward a concise and compelling argument for continued investment in development.
For those who don’t want to click through, this is probably the key point:
“In the Marshall Plan, America invested more than $200 a year for each citizen of the countries they helped back on to their feet after the Second World War Though the needs in Africa today are much greater, and the donors are more numerous and much richer, we choose to give much less. Over the last twenty years, total aid to sub-Saharan Africa has hovered at about $37 per person per year.4 (Part of the reason the amounts for Africa are unexpectedly low is that less than two fifths of all aid goes to very poor countries.5) On the rare occasions that aid has reached Marshall Plan levels it has often been associated with rapid growth. For example, aid to South Korea was over $200 per person per year in the two decades from the mid 1960s, during which time South Korea achieved annual growth of nearly 9%. In Botswana, in the two decades after independence and before diamond exports made it largely unnecessary, aid was over $150 per person per year, peaking at $200 per person in 1980; during this time Botswana had the highest average economic growth rate of any country in the world, bar none.”
@Laura: Thanks 🙂 I’ll have a read of Owen Barder’s post too.
@Laura again: That second article also looks interesting. (I’m also a slow typer!)
So lets get this straight: Lib dems in the government stand back and let the Tories slash public services, privatise the NHS, cut benefits for the poorest, raise a regressive tax, cut social house building, cut school refurbs, cut job programmes, cut environmental projects etc etc etc, but the thing they should do to make their mark, is to get rid of one of the only progressive things the Tories put in their manifesto? I’ll assume this is a satirical post.
@joe mac
Indeed, I almost expected it to be a ‘guest post’ from Norman Tebbitt .The speed at which the Lib Dems are rushing to adopt the mantle of the new Thatcherites is quite astonishing,they appear to be attempting to carve out a niche for themselves on the radical right.I suppose someone has to.
Lord save us all from free market nut jobs and their moral self-regard as they denounce “feel good politics”.
A post full of the classic strawmen arguments, I notice, such as aid is not a silver bullet. So? Only the idealists have said anything to suggest it was. Aid is spent badly. Yes, and yet another financial crisis has shown that free markets malfunction. Should we also leap to the knee-jerk reaction that if aid doesn’t always work and should be canceled, that the market failure means market mechanisms should also be banned, no matter the “feel good factor” supply siders get from them?
And look at the countries used as examples: Mauritius, a safe haven which for almost its entire habited history has been run by a European nation. South Korea – a major economic power, a peaceful domestic situation even taking North Korea into account, with strong ties to the US. Botswana – holding free and fair elections since independence in 1966, and again strong US ties. These do not appear to be valid comparisons, and certainly not examples of “unilateral” decisions.
As an example of more reality based concerns, I was listening to Mo Ibrahim at the London Business School (hardly a hotbed of left wing thinking). Dr Ibrahim is someone that does actually builds businesses in Africa, as compared to academics like Dambisa Moyo – an “African expert” whose income depends upon catering to the free market mindset. He made the point that many incoming investors, have a habit of striking deals with dictators that may not be around that long, make the most of Africa’s natural resources, the local benefits of which aren’t seen by the local people, and then complain about the difficulty of doing business in Africa.
The issue of corruption is quite simply not restricted to government-to-government aid, and increased involvement of the private sector is no “silver bullet” either. The theme of this article is essentially that because aid is not perfect, the free market must be. Given recent events, this is a remarkably naive view.
He raises morality as well. From that perspective, the goal of aid to Pakistan is to help the people of Pakistan, and to move towards a generally safer world environment that doesn’t breed terrorism. The majority of Pakistanis I’m sure would be quite happy with such outcomes. When Tim says, “Pakistan is to become the largest single recipient by 2013. While it can be argued that that this makes geopolitical sense, it certainly blunts the moral imperative,” I can’t help but wonder why he thinks aid to Pakistan has no moral imperative. He doesn’t give a reason. Are all right thinking people simply supposed to know? I always find it more difficult to follow an ideological argument than a rational one.
I think there are good points made by John Wells.
This article should be seen in context. I do not know one single Lib Dem MP past or present who thinks we should not spend 0.7% of GNI on foreign aid. I am sure that 99% of the Lib Dem membership think likewise. Liberal Vision like to be controversial, but when they tried to amend the airbrushing motion at the last Lib Dem conference, only a handful of people voted with them. In other words they are just a tiny section of the party.
There is a legitimate debate on whether foreign aid is well spent. It might get siphoned off to corrupt leaders, or it might be military aid for Israel for example. By all means be critical, but don’t use that as an excuse to reduce our commitments.
The 2 latest disasters; flooding in Pakistan and fire in Russia are both the result of Extreme Weather Events probably caused by global warming, and since most of global warming is caused by the rich nations of the west we are morally obliged to do something to help, as well as make our own reductions in carbon pollution.
Great post.
“Liberal Vision like to be controversial, but when they tried to amend the airbrushing motion at the last Lib Dem conference, only a handful of people voted with them. In other words they are just a tiny section of the party.”
Geoffrey Payne likes to be controversial, too, or at least inflamatory, but I defy him to show how the amendment to the airbrushing motion had anything to do with Liberal Vision.
Can you explain, Geoffrey, why we should spend 0.7% of GDP on foreign aid? Why not 0.6% or 0.8%.
There is indeed a discussion to be had about foreign aid. And yes, even if one accepts the 0.7% GDP transfer principle there is a debate to be had over how best to use it. But to accept the principle uncritically is naive.
Of course, by making unsubstatiated statements such as “The 2 latest disasters; flooding in Pakistan and fire in Russia are both the result of Extreme Weather Events probably caused by global warming, and since most of global warming is caused by the rich nations of the west we are morally obliged to do something to help” one can bypass that debate by painting the poor as victims of harm caused to them by the wealthy West. But it is neither provable nor helpful.
What that statement does highlight is a substantial difference between disaster relief and economic development. Financial transfers can do a lot to help in emergencies, such as the floods, or the Haiti earthquake or to allieviate hunger in a famine. But long term, sustained transfers have a far less clear record of economic development. If we want to help the developing world we would be better off focussing our attention on tearing down tarrif barriers and ending export subsidies, even if it meant spending the current DfID budget on helping domestic workers and companies adjust to the new conditions.
It’s unbelievable! In the last couple of days there have been posts utterly dismissive of people living in council houses (even outright resentment that some of you are having to rent in the private sector whilst others live the high life in social housing), all because of a wild Thatcherite thought of Cameron’s. Now this.
Yes, by all means, stand up and be counted by trying to end development aid. That’s a really good way to differentiate yourselves from the Tories. What next? Putting up regressive sales tax and cutting jobs whilst reducing income tax for those lucky enough to stay in work? Ending Child Trust Funds rather than just means testing them?
Soon we’ll be asking whether you’re too right-wing to be in a coalition with the Tories…
@Tom Papworth:
“If we want to help the developing world we would be better off focussing our attention on tearing down tarrif barriers and ending export subsidies”
Why is it either/or? Also, in the real world, the CAP isn’t going anywhere any time soon, and nor are the North American corn subsidies. So while it might be better to lift trade barriers than to give aid, it isn’t going to happen – and even if it could, why can’t we do both.
“Financial transfers can do a lot to help in emergencies, such as the floods, or the Haiti earthquake or to allieviate hunger in a famine.”
They can. But Disaster Risk Reduction is also very important – just contrast the loss of life in the February Chilean earthquake with that in Haiti, although they were similar magnitude. And on famine, go and read Sen and De Waal – both of them show that famine isn’t caused by a lack of food, it’s caused by politics and lack of preparation. Helping people adopt long-term livelihood strategies that avoid environmental depletion and allow them to cope with droughts is a much better way to prevent famine deaths than waiting for a famine to break out and then reacting. It’s also pretty difficult to differentiate exactly between ’emergency’ and ‘ongoing need’ – take, for example, the current food crisis in Niger. A lot of people are suffering from malnutrition, but,although this year is unusual, a lot of people suffer from malnutrition every year – should you just feed them without trying to address the underlying problems?
“But long term, sustained transfers have a far less clear record of economic development.”
Indeed, aid is complicated. But there is actually evidence that some interventions are very effective. Some aren’t, but that’s the price of innovation, and some are just bloody difficult to measure. There’s also a question of whether the point of development aid is to generate immediate economic growth. For example, if you distribute mosquito nets across a whole region, a lot fewer people will die of malaria. This will have immediate economic benefits – people are more productive when they’re not constantly sick, and they no longer have to spend quite as much money on funerals – and long-term economic benefits – children do better in school because they can concentrate better because they aren’t always sick, eventually people start having fewer children when they realise they’re not going to die of malaria. But do we really need those things to know that distributing mosquito nets and saving lives is a good thing?
You also fail to deal with the point that not all development aid takes the form of cash transfers to the government, or that if you think a certain type of aid isn’t working, it’s probably worth trying to find ways of doing it better, rather than just giving up on the whole thing altogether and sod the people who you condemn to poverty in the mean time.
It’s worth remembering in this debate what we’re talking about – it’s not an abstract issue of intergovernmental transfers that never touch real people – we’re talking about billions of people who are forced to watch their children die from preventable diseases, to know that they’re never achieving their potential, and to worry, every day of their lives, if they’ll have enough to eat that year. Before even *thinking* about things like cancelling aid, we need to be very aware of the human impact of what we’re talking about.
Mike80
Look. All people are saying is that charity begins at home. So long as it’s not a council home.
Is that so unreasonable?
@Mike80: I haven’t followed the council house debate, but it’s worth pointing out that increasing the tax-free allowance means more money in the pockets of many people who are on benefits as well (e.g. part-time unemployed), and means that the effective marginal tax rate (tax plus reduction of means-tested benefit) falls, which reduces the poverty trap. Would you prefer a VAT rise without any compensating increase in the tax-free allowance?
And the Lib Dems have always wanted to end Child Trust Funds because the money (as well as the costs of administering the system, which would only increase if it were means-tested) are better spent on helping children from poor families do well at school. To adapt a famous Chinese proverb, the idea is to teach children to fish rather than give them a fish.
Both of these policies were part of our manifesto (unlike some of the things we signed up to in the coalition agreement), so they should hardly be either a surprise or evidence of Toryfication of the Lib Dems.
Sorry, it should read “the money…is better spent”.
Glad to see so many people already rubbishing this fiction that Aid doesn’t work.
Aid is an investment and like any investment bears risk- occassionally the risk means lost but by and large DFID’s spending now-a-days is a pretty safe bet.
The Libdems in govenment should be shoring up and calling for increases in government to government spending (so called ‘budget support’) and should be tying this in to democratic accountability rather than donor led presumption.
We need to scale upto 0.7% and start to think about the ways we can increase support for people and communities in developing countries who are having to adapt to climate change and who will have to develop in a lower carbon way than the pathway we’ve benefited from.