The UK government is spending nearly £7 billion on overseas aid. That's three times as much as ten years ago. Where does all the money go and is it being well spent? Why has it increased so much?
In the light of our present economic climate, we are ensuring that our own hard earned income is spent wisely and without incurring waste. It may be a comfort to think that our taxes towards overseas aid to developing countries are being spent in a similar way. We entrust our Government to spend wisely on our behalf and to use it effectively in the global fight against poverty and starvation. Can we trust them to deliver where it is needed?
The Government has introduced new reforms over the past ten years that have increased the amount designated to developing countries.
One of the main reforms is the introduction of the Millennium Development Goals that were agreed in 1999 as international targets on reducing global poverty by 2015.
They were agreed by every UN Member State in 1999. They represent a united international commitment to reduce poverty and are aimed at promoting sustainable development and eliminating poverty. The eight goals are to:
• Eradicate extreme poverty and hunger
• Achieve universal primary education
• Promote gender equality and empower women
• Reduce child mortality by two thirds of children under five
• Improve maternal health
• Combat HIV/AIDS, malaria and other diseases
• Ensure environmental sustainability; and
• Develop a global partnership for development
However, there is doubt now that these goals will be met. Tony Blair’s statement on joining the Africa Progress Panel states that " Africa remains far short” of its goal of making “substantial inroads into poverty reduction” (Press Release 8th November 2007).
DFID (Department for International Development) attaches great importance to its role within this global target and wants these aims to be fulfilled. However, effective engagement of all these parts of the international system is needed if the Millennium Development Goals are to be met.
John Piper, an economist from DFID has worked in many developing countries and has worked on behalf of the UK Government in allocating money appropriately. He agrees that although targets are good to work towards, the developing world needs to be sustainable beyond 2015.
“The Millennium Development Goals are good because they focus international attention and get us serious about poverty and instil in us a priority to meet this challenge.”
He agrees that effective engagement of all the goals is the key to making them a success. However, he can sense the dangers of allocating more money when the targets are off track, just so they are met successfully.
“I am not so convinced. We need to take a balanced across the board approach. There’s no point in putting more money in when the targets are off track. That’s the danger.
It’s important not to take them literally. Life doesn’t stop at 2015. Life has to be sustainable beyond that.”
It may have been over ambitious to presume the MDGs will be successful. But this commitment was reinforced in 2005 at the G8 Summit in Gleneagles when work began to meet the new global challenges of reducing the world’s impoverished countries. The G8 agreed to double aid worldwide by 2010 with half of the additional resources going to Africa.
In addition last year, 44% of DFID’s bilateral programme was spent in Africa , whereas Asia only received 34% compared to only 2% in Europe . John Piper attributes the increase to Africa to Clare Short’s commitment to Africa when she was Secretary of State for International Development (from 1997-2003).
“Gordon Brown is now committed to and believes in public services; so as a Government we have had massive increases in education and health so generally the public sector size has increased. Within that DFID bilateral giving has also increased.”
It seems that Africa has benefited most of all from aid commitments made to it but it is still failing to meet all the MDG set out by the United Nations.
Another goal of “achieving universal primary education” is one goal that is on its way to being achieved. Countries such as Burundi, the Democratic Republic of the Congo, Ethiopia, Ghana, Kenya, Malawi, Mozambique, Tanzania and Uganda “have abolished school fees, which has led to a surge in enrolment: in Ghana, for example, public school enrolment in the most deprived districts and nationwide soared from 4.2 million to 5.4 million between 2004 and 2005.”(Source: mdgmonitor.org)
This is not the experience of Paul Hicks of the Tanzania Charities Network in Dar es Salaam who has lived in Tanzania for 12 years and has seen no change in the standard of primary schooling. “Local schools are in terrible shape, even since the abolition of school fees, the children are used as free labour for the teachers as the teachers aren’t paid. It’s a disaster.”
(Click here to see TANZANIA IN FOCUS)
He is also unimpressed by the UK Government’s bilateral giving in the form of Budget support to Tanzania where aid is provided directly to another country’s government central budget. (This is an alternative to Project Aid which funds more “concrete” stand alone projects .) Last year DFID spent £461 million on budget support to 13 countries. (This sum represents nearly 20% of its bilateral expenditure and is now the preferred method of delivering financial aid.) Instead of having individual programmes, “we will write you a cheque to put in your budget, but by doing that we want to have discussions about how you spend it. Within that, we hope to tackle some corruption issues. We knew that 18-20% of that money would be used on corruption, but if you can shift it to 15% that would make a massive difference” explains John Piper.
This form of giving concerns economists. William Easterly in the Prospect Magazine in a letter to Hilary Benn MP on 4th October 2006. “Are funds provided to governments with no strings attached, even if it means more winds up propping up corrupt autocrats? Or do they attach the strings and try to “fix” the government?”
Mr Hicks is also cynical that budget support will work long term – having had first hand experience of corruption when setting up his three charities. “I suspect that the Tanzanian government is just learning how to respond to the UK bureaucracy. The corruption is so rife in this country it’s unbelievable – from the top to the bottom it's there and built in with the very fabric of society.”
The risk that the aid will not be used effectively is a concern just so results are delivered. DFID relies on developing country’s systems, which are often weak. This was a finding from a recent recommendation in the House of Commons Committee of Public Accounts Paper reporting on DFID’s provision of Budget Support (12th May 2008)
“ DFID has not established the effectiveness of budget support relative to other types of aid, or been able to conclude whether, as currently implemented, it represents value for money.”
This concern is echoed by economist Stephen Bailey-Smith, Head of Africa Research at Standard Bank who believes that bi-lateral aid can have a detrimental effect on the infrastructure of a country. He believes that “aid overvalues the currency of developed countries and therefore can undermine the domestic structure of a country. It is subsidising the need to produce and export their own goods.”
John Piper remains positive that aid does make a difference. “ Development only works when you have got people in the country who want to make it work and who genuinely have an interest to make things better. That is the key to successful development when you can identify individuals to support you."
Streamlining the UK’s expenditure with a number of multilateral organizations such as the World Bank Group, the European Commission and UN Agencies is a way that aims to make the most of the development budget. The UK’s expenditure to multilateral organisations cannot be directly allocated to any one country but last year it increased payments through the World Bank Group by £319m to £592 million. This includes particularly large increases to the African and Asian Development Funds (£30m and £12m respectively).
So will the Millennium Development Goals be met and are they sustainable? John Piper thinks that the income will be met.
“ Not because of aid. But because of economic growth in China and India and in the private sector."
He believes this is the way forward in order to make countries stable in the long term. He refers the major changes that have taken place in India where both infrastructure and politically the country is safe. He believes that the only way to grow your own economy is through the private sector. Investment from other countries is the key to success. Once a country like Africa can produce their own resources, taxes and a structure of economy, they are the road to recovery. “If we are able to get 8-10% growth over 10 years, you lift a lot of people out of poverty. But long term systematic changes take years”
Stephen Bailey Smith has seen the investment in developing countries progress and he says that the only way forward is to put investment in to Africa . "If you reinvest your money there, the country will flourish. If the locals believe in the economy, then the place will develop. They know that it will be investment creates wealth.
The African economy will boom because most wealth comes from labour. We all know that they work for a dollar a day, so in the long term their economy will become competitive with other countries. This in the end will be the answer"
"The rich world does have responsibilities to the poor world but the relationship has to be two-way. In return for more and better aid, African countries promised better governance.”
“It is developing country governments, not donors who have to take “responsibility” for the economic, social and political development of this own people. It is politics that makes the difference”.
Politicians in rich countries cancelled debt, allowing politicians in developing countries to abolish school fees. If that is not aid making a difference, I don't know what is.
Hilary Benn MP
