Development aid and its discontents

donationRecent editorial pieces (such as here and here) by Jonathan Foreman, Senior Research Fellow at Civitas (a UK think-tank), have been causing somewhat of a stir. Promoting his new book, Aiding And Abetting: Foreign Aid Failures And The 0.7pc Deception, Foreman has not only condemned Britain’s foreign aid as “riddled with waste, mismanagement and fraud” and suggested a reduction in spending, he has also  questioned the underlying motivations of those who advocate international aid. Many with interests in official government development aid will feel affronted, but all should give consideration to what he has to say.

A lively discourse on the  effectiveness of state international aid is healthy. Where spending occurs overseas it is more important than ever for the electorate to scrutinise and question decisions and outcomes. It could be argued that those of us interested in philanthropy should think more about how attitudes toward state international aid  impact on giving. Because there is a danger that when reading stories of waste and failure in aid the public will not differentiate between government spending and their own philanthropy.

Foreman makes some valuable points as well as some pretty unhelpful assumptions. Let’s start with the former. Perhaps his most powerful argument is that an “extreme reluctance” to listen to evidence against spending on international aid or to  acknowledge its shortcomings is hindering the very outcomes that advocates of aid profess to seek. I do think that this observation has an element of truth to it.

Linda Pollman’s account of how international aid had actually prolonged the genocide in Rwanda by indirectly funding Hutu perpetrators comes to mind. Rather than leading to introspection and further examination, it was ignored or angrily rejected by many in the  humanitarian aid community. And if influential economists such as Dambisa Moyo are telling us that regions benefitting from aid are consistently being outperformed by those who don’t, shouldn’t we take that seriously?

Yes, of course we should. It is absolutely true that impact measurement needs to be nuanced and that social value should be taken into account when assessing the efficacy of aid, be it government aid or private philanthropy. But if the overarching aspirations of beneficiaries are not being met, or worse are being hindered by current aid programmes then serious questions must be asked.

Foreman suggests that at the heart of the problem is an almost dogmatic belief amongst the electorate and politicians that international aid is effective. To Foreman this “faith” in  aid “offers believers an almost spiritual sense of their own goodness” that facilitates a blindness to failures. It is an interesting notion, if difficult to substantiate.

A more obvious reason for the uncritical assumption that aid is beneficial could be the lack of clear and accessible  information on impact available to the public. Until we have taken steps to improve the accountability and transparency of aid we will not know whether it works, or has the potential to work. Furthermore, given that that David Cameron’s government has taken serious measures to make international aid more accountable since coming to power in 2010, we should allow these measure time to take effect before we make further judgement.

The Department for International Development (DFID), singled out for stinging criticism by Foreman, has taken steps to be more transparent in recent years, having signed the International Aid Transparency Initiative (IATI) and published DIFID113 datasets on its numerous projects. The coalition government has also  created a new inspectorate, the Independent Commission for Aid Impact (ICAI), which has wasted little time in highlighting where mistakes are being made.

But Foreman has strongly held opinions about the negative impact of aid on recipient nations, regardless of how it is delivered. His description of aid work as offering “endless gap-year exoticism and third-world partying” may be overstated but his references to an air of resentment amongst many local people are not, and often for good reason.

 Aid can affect economic growth negatively by leading to the overvaluation of currency and reducing competitiveness. In addition, talented people that may have brought value to the economy through entrepreneurial endeavours may instead see working for the relatively highly paying foreign funded aid projects as more desirable. Furthermore, the  democratic deficit created when a government receives more money from abroad than it does from tax revenues can also undermine the development of accountable government institutions and a vibrant civil society which are crucial to a developed economy.

With this in mind it seems only right that we should consider alternative ways in which developed nations can facilitate international development. But the presumption  that ceasing governmental aid would necessarily advantage those countries currently receiving it is short sighted. To say that because South Korea and Taiwan have successfully developed their economies with little help whilst Africa has continued to suffer despite trillions of pounds of aid is justification for curtailing official aid is overly simplistic. There are many factors which undermine development and the conditions in modern day Sub-Saharan Africa are simply not comparable to those of East Asia in the mid twentieth century.

But the most troubling aspect of Foreman’s recent forays into the media are his misleading and, given the wide audience he has reached, harmful comments about the worthiness of countries in receipt of UK aid. Describing Indonesia, a country whose GDP per capita is just 13% of the UK’s,  as “wealthy” merely detracts from the validity of Foreman’s core arguments. The idea that having a space programme  means India is too wealthy to deserve UK aid is wrong-headed. The Indian Space Research Organisation has focussed primarily on developing satellite technology, which as well as being vital for mapping its natural resources and for advancing its burgeoning communications industry, also allows it to earn money from launching satellites on behalf of other nations. The fact that it is  estimated that US economy gains $8 for every $1 of tax payers money invested in NASA’s budget shows that this is a legitimate investment for such a large developing economy.

In summary, we should welcome an open and balanced discussion about the efficacy of our government’s international aid spending. Furthermore, we should be prepared to acknowledge and confront some unwelcome truths about waste, corruption and failure. But given that global trust in NGOs has fallen by 3% in the last year and that CAFs recent 2012 World Giving Index has shown a reduction in global giving – we should not be making overblown statements which  undermine confidence in charitable giving. Its a shame that for someone who rails against blind faith in development aid, Jonathan Freeman couldn’t take a more nuanced view.

Adam Pickering

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