Agonizing over Aid

Nothing makes me feel more like a woolly liberal than the aid debate. I seem condemned to see both sides of the argument and veer between the ‘aid as salvation’ and ‘aid as imperialism’ camps. With equal vehemence and seemingly absolute certainty, aid pessimists slug it out with aid optimists, often citing the same evidence, but arriving at completely opposed conclusions. What’s particularly odd is that the most scathing sceptics often work for the aid industry, or at least for the NGOs. It’s a bit like the Automobile Association urging a mass switch to rail (if only).

The latest anti-aid salvo comes from Jonathan Glennie, in a crisp, well argued book to be published in October (one of the benefits of being in the back-cover-plug business is you get to see stuff early). Jonathan divides up the impacts of aid into

· Direct impacts: in recent years aid has funded lifesaving AIDS drugs for two million people, paid for 30 million bednets, leading to a two thirds reduction in child deaths in Rwanda, and so on. With the exception of the odd dud infrastructure project, this is strongest argument for aid.
· Policy impacts: cue big critique of economic policy conditionality, which I would share
· Institutional impacts: Glennie sees these as overwhelmingly negative. Again I would have some sympathy with this – see the revealing paper on the impact of aid on Ghana, by my colleague Emily Jones or the great article on Afghanistan in June’s Prospect magazine  – but the impact of aid on institutions is complicated; healthcare and education are not just good in themselves, but vital to building accountable institutions
· Macroeconomic impacts: a somewhat flimsy discussion on whether aid does/doesn’t lead to growth, and whether growth does/doesn’t lead to poverty reduction, plus that staple debating point of aid economists, Dutch Disease.

So aid has good points and bad points (shock!). The interesting thing is what happens next – Jonathan concludes that we need ‘less and better aid’, whereas Oxfam (like most of the aid industry) plumps for ‘more and better aid’. I’m not sure there is any rigorous way of weighting aid’s positives and negatives, because they mix up things you can measure and things you can’t – short term growth, the emergence of political institutions, citizenship, rights and long term development.

Jonathan slags off Oxfam and others for being ‘caught in a curious double speak. On the one hand they are some of the most forthright critics of aid conditionality and its harmful effects on Africa. On the other, they are the most vocal of all of aid’s advocates.’ But is that such a contradiction? We are arguing (based on what we have seen on the ground) that aid can be improved, the good impacts strengthened, the bad impacts contained. He thinks aid is beyond repair. Glennie uses a wonderful syllogism from the classic British political comedy ‘Yes Minister’ to caricature aid optimists’ argument, ‘Something must be done; this is something; therefore we must do it.’

But I have my doubts about the psychology underpinning the oppositionalist line as well – long experience in NGO-land shows how much safer we find it to oppose than to propose solutions. Proposing things runs the risk of winning, with all the anxiety that brings that you will be proved wrong, or have been coopted or conned. This may help explain why NGOs can be so grudging in their recognition that aid systems are improving in many respects. There is simply no comparison between the days of no-questions-asked slush funds for dictators like Zaire’s Mobutu, and how aid is managed today, but we seldom acknowledge this.

All this is covered in From Poverty to Power (more on aid here), including a handy table comparing the work of three top aid gurus, Jeffrey ‘optimist’ Sachs; William ‘pessimist’ Easterly and Paul ‘Bottom Billion’ Collier. I conclude that aid can (and must) be designed so as to strengthen, rather than undermine, the ‘social contract’ between citizen and state that lies at the heart of development. Rich countries have a moral obligation to provide ‘more and better aid’, but we should certainly not put all our eggs in the aid basket or assume that aid alone can ‘make poverty history’ (to coin a phrase). The main arena of development is national, (where most of Oxfam’s work takes place) and the main actors are active citizens and effective states (at least I agree with Jonathan on that).

With two big aid summits scheduled for the autumn (in Accra on aid effectiveness, and Doha on ‘Financing for Development’), expect to see much more jousting between optimists and pessimists, each arguing their case with absolute conviction. If I am among them, please remind me of this admission of self doubt…

Last word goes to Gebreselassie Yosief Tesfamichael, Eritrea’s Finance Minister, in the wake of the Gleneagles summit, which in stark contrast to Hokkaido, made real advances on aid:

‘By many measures, it’s been a great year for Africa, with debt relief, awareness-raising concerts and G-8 leaders pledging more aid. I’m gratified the world has turned so much attention to my continent. At the same time, a voice inside me wants to shout: “Wait. This is not the way real development happens! … We continue to ignore the stark lesson that externally imposed development models haven’t gotten us far. The only way forward is for Africa to drive its own bus and for the driver and passengers to be in full agreement about where they’re going. That said, we do need help filling up the tank.’

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Comments

4 Responses to “Agonizing over Aid”
  1. Jonathan Glennie

    Hi Duncan,

    I am pleased you liked (most of) the book. It was written for campaigners, students and all those interested in progress in Africa. The focus of Oxfam’s FP2P work, as you point out, has some important coincidences with the thrust of my book, which I hope contributes to the debate about where Africa should be seeking the money it needs to develop, and what the role of western governments could be.

    Let me just respond to two of the issues you raise in your piece. I know I need to steel myself for having my views slotted into the “anti-aid” camp, and I suppose it is inevitable that my book will be seen by some as an “anti-aid salvo”, but it isn’t. I am not an aid pessimist – aid can do a lot of good and there is a case for increasing it in some African countries, most obviously Botswana. I am no more anti-aid than I am anti-foreign direct investment or anti-market or anti-state intervention. I am pro-all of these things when they support development and poverty reduction and anti-them when they don’t.

    I am an aid realist. Aid optimists, are using the evidence selectively to make their case for big generalised increases of aid, just like aid pessimists do. To quote a little extract from the book:

    “Aid realism means not getting swept away by the ethical clamour to ‘do something’ when a proper analysis shows that what is being done is ineffective or harmful. And it means not bowing to an ideological anti-aid position in the face of the rights and urgent needs of millions of people. It means carefully analysing the overall impact of aid on Africa, firstly to see how it can be improved and secondly, and more importantly given that improving aid will be a very hard job, questioning aid’s importance in relation to other policies and factors that influence development and poverty reduction in Africa.”

    As I argue in my book, a combination of harmful policy conditionalities and the unforeseen consequences of aid dependency (a new phenomenon only seen in a handful of countries outside Africa) has meant that in many countries in Africa, the impacts of aid are ambiguous, with negative impacts possibly outweighing positive. While acknowledging some progress in improving the impacts of aid I argue that the key problems either persist (in the case of conditionality) or are worsening (in the case of institutional accountability and effectiveness). If aid doubles to Africa by 2015, almost three quarters of African countries will rely on aid for over half of their total public expenditure, according to an IMF projection, with almost half receiving over 75% of their government expenditure in aid. I like FP2P’s focus on active citizens and effective institutions (exactly where I would put the emphasis as well), but there is a serious danger that this scenario could undermine rather than underpin progress in these areas.

    In such circumstances it becomes sensible for African governments to plot a course to reduced aid dependence over the next 10 – 15 years. You can’t just cut off aid and nor would you want to. But you can begin to take the steps necessary to reduce and replace it. Meanwhile in most of the poor world (India, China, Latin America) aid is negligible as a % of GDP. In neither circumstance does campaigning for a lot more of it make much sense.

    Which brings me to my second point. I agree with your instinct that NGOs sometimes prefer to criticise than to propose – it is something we need to constantly be aware of. Which is why my final chapter is full of proposals (!!!). Firstly I describe how Africa can reduce its dependence on aid by accessing other money streams, from stemming capital flight and debt payments to developing other revenues, reforming tax and banking systems, sometimes using policies frowned on and blocked by aid donors. Then I present a range of important things western governments can do to demonstrate real generosity, not just the sop of more aid. From fair intellectual property rights rules to the brain drain, from migration to the arms trade, from climate change to investment in vital health technologies, from reforming tax havens to regulating foreign investment – these and many more issues are the ones we should be focusing on, that would make a real difference to Africa. Most important of all is policy freedom, the right and duty of African governments to develop and make choices (and mistakes) as they see fit. Incidentally, I argue that while transfers of money to Africa may not be the answer, donors should meet and surpass the 0.7% target, but spend the money on developing transferable climate, health and other technologies which would have many positive impacts but far fewer negative ones.

    The campaign against poverty in Africa has matured since the early days when more aid seemed like the best solution. We have learned a lot and most of us work on many other issues besides aid. But we only have a limited amount of collective political pressure, and while aid remains the number one priority, vital political energy is sapped from other more important campaigns. Isn’t it time to take the next step, to take our foot off the “more aid” pedal, and to persuade our government and others to do things that will make more of a difference?

  2. ok, this way…. Can’t you find someone in the whole continent other than the finance minister of one of the most oppressive regimes on the continent to bolster your arguments?

    Isaias has a habit of driving his bus anywhere he wants with no mind given to where the passengers want to go, what the conductor might think or to who he may drive straight into. Djibouti was the latest I believe.

  3. Wasai Nanjakululu

    First, I would like to congratulate Green and Jonathan for your very brillaint ideas and for providing readers with ample fodder for a debate on aid: whether it is more or less but better aid’ all the same.

    I believe that while the quality of aid can best be seen in how it used or misused as is often the case in Africa, much of the challenges of aid in Africa has been to do with its architecture. By this I mean who is giving what, to who, why, when and how.

    To illustrate this, may I give an example of the Global Fund to fight HIV and AIDS, TB and Malaria. The GF model in my view is one that can be replicated albeit with modifications due its own weaknesses to deliver aid to the poor. But having said that, not all donor countries interested in supporting countries fight off these diseases give all their assistance through GF despite the obvious benefits that would acrue from such a move which include reduced transaction costs on the part of the giving donor. The US still had to come up with a parallel institution (PEPFAR)to dispense its aid to AIDS. The question is why?

    I think that aid giving could be professionalised if donor countries were serious in making their aid work for the poor in Africa. Dispensing aid through a non political, non ideological mechanism like the GF would begin to address some of the inherent challenges that face aid in Africa as we know it. If this is not done, the continued giving of aid through bilateral mechanisms while not bad in itself, is often not easy to separate the giver’s business/political/ideological interests from the gesture of aid giving. Often it may be unspoken but it follows that the recipient has to behave in a certain way not necessarily linked to using the aid well and for the intented purpose. While aid given through GF looses its political/ideological and other strings and only assumes the string of professional and technically sound proposals from needing cases. The same can not be said of bilateral aid!

    That is why for instance PEPFAR gives millions of AIDS funds to Ethiopia which has a far much lesser HIV and AIDS problem than Zimbabwe due in part to Ethiopia’s geopolitical importance to the US in the war on terror while Zimbabwe despite its dried up aid kitty due to sanctions can still access GF funds. The two countries have similar internal political governance challenges but are treated very differently by the US, but the same countries are treated in the same way by the GF. The difference is GF bases on how technically sound an applicant’s proposals are in view of their need. I doubt that the US’s criteria is the same.

    The challenge is: are donor countries willing to let go their influence which is peddled through aid even when that aid is well intentioned? If yes let us see more if not all donors use the GF for a start in dispensing their AIDS funds to Africa and other countries in need. Only then will it begin to emerge that donors as well as recipient countries are serious in letting aid work for the poor and not to prop up friendly but asbusive regimes, use it to further business/political/ideological agendas and only have development as a by product of these agendas.

    The 0.7% of GDP from all OECD countries can be reached but may have same results as before unless aid giving is professionalised and structured in a manner that benefits the poor and works for development and not any other agendas as the case may be.