A truth about international aid

This was posted by a Tanzanian in response to a Guardian editorial extolling the virtues of international aid. It tells its own story.




I recall a friend returning from a period working in West Africa who declared that she would never again give a single penny to international aid charities other than for specific disaster relief.

The international aid business, from the well-paid folk who work for government agencies to the globe-trotting poverty-mongers of Oxfam, is a total shambles. It's not simply, as the Guardian commenter observed, that the aid is misspent or abused but that these agencies actively support policies specifically designed to maintain the 'rural economy' - in effect to keep subsistence farmers as subsistance farmers. I see this as active intervention by rich countries aimed as keeping poor people in poor countries poor.

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A reminder why we have an international aid budget

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I get the anger at there being cuts at home while the budget for international aid has been protected. And, for the record, I don't support the mandated 0.7%, the de facto hypothecation of the budget or the preference for bilateral deals. But having an international aid budget isn't simply a case of us rich folk being nice to poor people in Africa. Investing in those places - helping them develop - is absolutely in our interests.

As we've been reminded:

Whether it was the Mediterranean's deadliest refugee drowning in decades remains to be seen. But it was certainly terrible, and its political effects could spread far. One of the survivors of a refugee boat that capsized late on the night of April 18th in the waters between Libya and the Italian island of Lampedusa said that at least 700 people had been on board. Just 28 have been rescued so far. That would make it by far the worst maritime disaster in the Mediterranean since the second world war.

A great deal has been made of the decision by the EU (and individual states including Britain) to end "planned search and rescue operations in the Mediterranean" because it was believed that fishing refugees from out of the sea only encouraged more of them to attempt the risky crossing. I do not support this policy - it is quite simply inhumane. I remember the suggestion - I think from P J O'Rourke - that instead of turning these folk away, we should be on the beach with a towel and a passport. We keep saying how we want risk-takers and people with get up and go - isn't that the very definition of these refugees?

The solution, if that's the right word, is for there to be less reason to leave Africa in the first place. And while war and the depredations of lousy government are part of the story, economic opportunity is central - just like us, these Africans are seeking to better their lives and are taking enormous risks in doing so.

And this is why we have an aid budget. It's also why that aid is better directed through multilateral agencies like the World Bank and International Monetary Fund than through cosy bilateral deals or, worst of all, through the agency of well-meaning but wrong-headed NGOs. Right now our aid programmes are a mixture of anti-globalist nonsense, the subsidising of rural poverty and a few strong infrastructure programmes (mostly around health and education). It's not the size of the budget but its direction that is the problem - we need investment that comes with strings, with a bit of that Washington Consensus that the left are so touchy about but which has been the single biggest reason for reductions in world poverty.

So long as the gap between opportunities here and opportunities there exists people will try to arbitrage the gap - some will be ordinary economic migrants, students and the like. But there's big money to be made smuggling people across borders and, as the Americans have found, it's almost impossible to stop people crossing those borders. So investing in those countries so they have the infrastructure needed for development makes every kind of sense if we want to prevent out richer places being a huge magnet for the billion or so folk out there who'd like a better life.

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On international aid...

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I wrote this a while ago - still stands and is relevent as we debate whether to set an arbitrary requirement that we spend 0.7% of GDP on international aid:

I really don’t care whether the UK spends 0.5% or 0.7% of GDP on aid – what I care is that the money actually does some good.

Taking this view doesn’t make me some kind of moral leper, someone who doesn’t care about the development of Africa or the suffering of the world’s poor. Indeed, those who advocate increased aid budgets but support the subsidising of western agriculture should look to their own contradictions – the Common Agricultural Policy does more damage to Africa than our aid programmes do good. And much the same can be said for other market distorting actions of the developed world – the structure of financial regulation (making it ever more difficult for developing countries to build a financial sector – even massive countries like India), the subsidising of basic industries, the dumping of production surpluses in the name of “aid” and much else besides.

If we really cared about helping Africa transform we would start removing these barriers, we would concentrate on opening up our home markets to the products of poorer countries, we would incentivise moving production upstream (processing and packaging the coffee in Ethiopia rather than Banbury maybe) and we would concentrate our aid on disaster relief, educating women and disease prevention.

Instead we choose to wave and shout about how good we are and how much money we spend. I find this sad.

 

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Why Philip Davies is right about international aid...

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Although he won't thank me for it!

If we stopped every single penny of government spending on aid (by which we mean our money going to help people in poorer countries) we would still be spending more than that much-vaunted 0.7% of GDP on aid.  And this is why:

Just one in 20 households in the UK make remittances, which are transfers of cash back to countries of origin to either families or communities. Yet, even though they are small in number, with an average remittance worth £31 per week, the World Bank estimated that last year some $23.16bn was transferred in remittances from the UK.

Bear in mind that the over-protected DFID budget is considerably smaller than this and you begin to understand that the whole pretence that we need to spend more on aid is just a sort of metroliberal scam. And those remittances from immigrants and refugees - getting on for £20 billion - work much harder than the generosity of governments. That money goes directly to real people, it doesn't need officials to administer it or aid workers to manage it. There's no need for grand plans or strategies. And it works - the people getting remittances spend it on improving their lives. On building better homes, on buying a bicycle or paying bus fares.

Because of the last fifteen year's worth of immigration we don't need to lavish more money on aid. But instead we indulge the 'fair trade' folk, the people who knit jumpers for Oxfam and the frowning people who tell us that 'free trade' damages these poor places. And we bung more money in the aid pot, money that does little or no good in poor places but, like the immoral scam that is fair trade, pours gentle soothing honey on our middle-class guilt about having a nice house, a car and two foreign holidays. We should stop - it doesn't work. Not like those little remittances to friends and family from recent immigrants:

Analysis of household survey data show that remittances have reduced poverty and resulted in better development outcomes in many low-income countries. Remittances may have reduced the share of poor people in the population by 11 percentage points in Uganda, 6 percentage points in Bangladesh and 5 percentage points in Ghana. Studies in El Salvador and Sri Lanka find that the children of remittance recipient households have a lower school drop-out rate. In Mexico, Guatemala, Nicaragua and Sri Lanka children in remittance recipient households have higher birth weights and better health indicators than other households.

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Subsistence farming isn't the solution to world poverty - mostly it's the cause

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Yet that is precisely what the "Live Below the Line" campaign would have us believe - that rich kids in the UK showing off by eating the diet of a subsistence farmer so as to gain some sponsorship and "raise awareness" somehow helps change the world.

The master of the sob story, Geoffrey Lean, having described his daughter's great sacrifice to raise £500 for this "Live Below the Line" cause, clambers up onto his soap box:

This is partly because the subsistence farmers who account for most of the hungry have been neglected. The proportion of international aid provided to agriculture slumped from 17 per cent in 1980, to 4 per cent in just over a quarter of a century.

Now this makes a lot of sense. Subsistence farming is not good for humans (they starve) or for the environment (those humans chop down forests and over-cultivate poor soils without fertiliser). Therefore it is utterly stupid to do what Oxfam and the other do-gooders want us to do and to direct the international aid to keeping these poor folk grubbing away at a tiny patch of soil - you only need to look at the photograph on Lean's piece in today's Telegraph to understand.

What we see is an African subsistence farmer watering a few seedlings with a galvanised watering can. You see the dry, dusty soil and, in the background a couple of rows of plants that have grow on a little. You'll see more productive and healthier looking allotments down your street. Yet, it seems that we must be aghast at the land these men are scraping a living from being enclosed so as to grow profitable crops on a commercial scale.

They are also increasingly being turfed off the land on which they depend by investors from rich countries. Every six days an area the size of London is either bought or leased by them in developing countries; nearly a third of Liberia’s farmland for example, has been acquired by companies. And around two thirds of these foreign investors intend to use the land entirely to grow, not food for local consumption, but commodities for export. 

"Turfed off" being trendy environmentalist speak for selling up and move to the city where there's more chance of a better life. We rightly note - and Lean does just that - how that last decade or so has seen the biggest and fastest reduction in extreme poverty in human history. But what these trendy environmentalists and socialists fail to acknowledge is that subsistence farming is the problem not the solution.

Instead these people want to keep those starving farmers on the land they can barely survive on - through aid and subsidy. The focus is on:

...aid for hungry farmers, land grabs, biofuels and the company tax avoidance that deprives poor governments of three times as much revenue as they get from aid.

Rather than realising how free markets, free enterprise and free trade provide the escape from poverty, these people want to trap poor Africans into dependence on the state's largess while trying to lay the blame on the businesses that create the means of escape from starvation, ill-health and penury.

Keeping farmers poor is not, and never will be, a solution to world poverty. Yet that is what the international aid establishment (living well and fat off our donations and our taxes) propose. Utterly shameful.

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Real international aid...

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We are supposed to pat ourselves on the back because we're handing over £11 billion or thereabouts in aid to needy countries. Much of this either props ups government budgets (and in doing so reduces any incentive to actually collect some taxes) or is spent on politically-correct environmental and education programmes. But that's as maybe - there's a much more important support going from the UK to those needy countries:

Just one in 20 households in the UK make remittances, which are transfers of cash back to countries of origin to either families or communities. Yet, even though they are small in number, with an average remittance worth £31 per week, the World Bank estimated that last year some $23.16bn was transferred in remittances from the UK.

This money goes directly to real people, it doesn't need officials to administer it or aid workers to manage it. There's no need for grand plans or strategies. And it works - the people getting remittances spend it on improving their lives. On building better homes, on buying a bicycle or paying bus fares.

This is real international aid:
 

Analysis of household survey data show that remittances have reduced poverty and resulted in better development outcomes in many low-income countries. Remittances may have reduced the share of poor people in the population by 11 percentage points in Uganda, 6 percentage points in Bangladesh and 5 percentage points in Ghana. Studies in El Salvador and Sri Lanka find that the children of remittance recipient households have a lower school drop-out rate. In Mexico, Guatemala, Nicaragua and Sri Lanka children in remittance recipient households have higher birth weights and better health indicators than other households.

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