Peter Hoskin

The requirement to rethink aid

The requirement to rethink aid
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Following my earlier post, on how Brown will contribute British funds to a World Bank fund for poorer countries, I just thought I'd recommend this excellent interview with Dambisa Moyo and Richard Dowden in the latest issue of Standpoint.  Fraser's already commented on Moyo's book Dead Aid (here, and The Spectator's review here) but a good thesis is worth repeating.  So here's her take on the failure of "government-to-government flows or multilateral-to-government flows" to improve conditions in Africa:

"...if you are a government and you have as much money as you would like to maintain the military, then you don't actually worry about being kicked out of office because the military is on your side all the time. Essentially, that is what has happened across Africa over the past 50 or 60 years. I can give you many examples of how aid comes in and supports a massive bureaucracy to work in the civil service...

...There are layers and layers of bureaucracy, which kills off entrepreneurship, leaves people out of jobs and when a government turns around and says there are people out of work, there are no jobs and people are poor, what is the first thing that the West decides to do? Oh, we'd better give people more aid. The aid system has got people locked into this cycle, where everybody sits back and thinks there is no need to try and raise taxes because we are going to get foreign aid. Or there is no need for anybody to be entrepreneurial because there is going to be more aid. The crux of the matter is that there are no countries on earth that are growing by 10 per cent a year, as China and India have been doing for the past few years before this whole crisis, that have relied on aid. These countries have quickly weaned themselves off foreign aid. They have encouraged domestic savings, they have attracted direct foreign investment, they have fostered trade. That is really the elixir that I am proposing for Africa.

As far as I am concerned, development is very easy. Africa doesn't have to reinvent the wheel, it just needs to copy. The political system that will emerge from having a strong middle class will ensure that there are property rights. It will ensure a stable democracy that really works and will ensure that we will actually get long-term sustainable growth and participation by the local citizenry." At this time, when we have enough economic problems of our own, and when our public finances are stretched to breaking point, there's an even greater requirement to think about how, and how much, we give to poorer countries.  Crucially, those same countries should also benefit from a new approach.