How to be a Millionaire
Over the last six months, I’ve been immersed in the politics and practicalities of development aid, hardly surprising, given that something like 80% of Malawi’s development budget was financed externally last year. One thing I’ve not really been able to do, amid the fire-fighting and constant negotiation that characterises the aid relationship, is what the role of foreign aid in the development process actually is.
So, now I’m going to say something a little controversial.
Poor countries do not develop because of aid.
Aid can be used to do those things that will help countries develop, like strengthening their government, their private sector and their tax collection mechanisms. But the critical factor is not the aid, though this is important, but the programme of work owned by the Government that the aid supports. That probably doesn’t sound too controversial, so let’s take a practical example.
Foreign aid probably shouldn’t be used to distribute anti-retrovirals, unless there is a short-term and pressing need to do it this week, this month. Because, to quote directly from a friend of mine, the challenge in international development is not to distribute ARVs or buy fertilizer. This isn’t difficult. You just need to spend, spend, spend and you can achieve it. The challenge is to ensure that the domestic Government has the capacity to buy these ARVs from its own domestic revenue, and distribute them effectively. And of course, recognise that this is an important thing, worthy of their spending.
Not too many aid delivery agencies recognise this, though the individuals working in them usually do. One of the fundamental problems is that many aid organisations are political in nature: they are branches of a benevolent Government, or simply so large and so important that they need to play a political game to ensure that they have enough support to continue to operate effectively. This has positive effects (accountability is a good thing), but also negative ones, most obviously, the need to make politically acceptable policy. Development processes across the world have rarely been pleasant. I’m not just talking about recent success stories, like those from East and South-East Asia, but also the first round of developing countries: Britain, America and the like. But aid delivery agencies can’t go to their electorates or audiences and say ‘we’ve had a great year consolidating resources into the hands of an incipient class of capitalist entrepreneurs, which may well help power significant economic growth and increase income across the board, though inequality will treble over the next few years.’
Much easier to say ‘success! We’ve distributed loads of ARVs, stimulated discussion and debate and have given a few farmers small plots of land!’
Most aid agencies are doing a good job, and alleviating poverty with good results, and I don’t mean to criticise the good work they do. But the next step is to grasp the nettle and start funding politically tricky areas and, more importantly, just supporting a country in its efforts to stimulate its incipient economy, despite all of the difficulties and inevitable pain that process will involve.
* * *
I’ve found a couple of blogs which (who?) are running an interesting experiment: for every comment posted on their blog, they will deposit one pound in the coffers of a charity they’ve nominated. I’m not going to do the same here, as I don’t get enough comments to make it worthwhile, but I’d encourage you to visit the Urban Chick, who has a list of participating blogs, and do your best to bankrupt her. (How did I find this blog? Well, once upon a time, I wasn’t quite as overworked as I am now, and had time to browse through thousands of blogs on blogspot.)
So, now I’m going to say something a little controversial.
Poor countries do not develop because of aid.
Aid can be used to do those things that will help countries develop, like strengthening their government, their private sector and their tax collection mechanisms. But the critical factor is not the aid, though this is important, but the programme of work owned by the Government that the aid supports. That probably doesn’t sound too controversial, so let’s take a practical example.
Foreign aid probably shouldn’t be used to distribute anti-retrovirals, unless there is a short-term and pressing need to do it this week, this month. Because, to quote directly from a friend of mine, the challenge in international development is not to distribute ARVs or buy fertilizer. This isn’t difficult. You just need to spend, spend, spend and you can achieve it. The challenge is to ensure that the domestic Government has the capacity to buy these ARVs from its own domestic revenue, and distribute them effectively. And of course, recognise that this is an important thing, worthy of their spending.
Not too many aid delivery agencies recognise this, though the individuals working in them usually do. One of the fundamental problems is that many aid organisations are political in nature: they are branches of a benevolent Government, or simply so large and so important that they need to play a political game to ensure that they have enough support to continue to operate effectively. This has positive effects (accountability is a good thing), but also negative ones, most obviously, the need to make politically acceptable policy. Development processes across the world have rarely been pleasant. I’m not just talking about recent success stories, like those from East and South-East Asia, but also the first round of developing countries: Britain, America and the like. But aid delivery agencies can’t go to their electorates or audiences and say ‘we’ve had a great year consolidating resources into the hands of an incipient class of capitalist entrepreneurs, which may well help power significant economic growth and increase income across the board, though inequality will treble over the next few years.’
Much easier to say ‘success! We’ve distributed loads of ARVs, stimulated discussion and debate and have given a few farmers small plots of land!’
Most aid agencies are doing a good job, and alleviating poverty with good results, and I don’t mean to criticise the good work they do. But the next step is to grasp the nettle and start funding politically tricky areas and, more importantly, just supporting a country in its efforts to stimulate its incipient economy, despite all of the difficulties and inevitable pain that process will involve.
* * *
I’ve found a couple of blogs which (who?) are running an interesting experiment: for every comment posted on their blog, they will deposit one pound in the coffers of a charity they’ve nominated. I’m not going to do the same here, as I don’t get enough comments to make it worthwhile, but I’d encourage you to visit the Urban Chick, who has a list of participating blogs, and do your best to bankrupt her. (How did I find this blog? Well, once upon a time, I wasn’t quite as overworked as I am now, and had time to browse through thousands of blogs on blogspot.)
posted by the Maradona of Malawi at 1:28 PM
