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Foreign Aid: How Much Good Does It Really Do?

IN ALL THE discussions that have gone on in the media and the political arena regarding where the axe should fall in public spending, the foreign aid budget has assumed something of the status of a sacred cow.

Last year, before he became Prime Minister, David Cameron committed his party to achieving the target set by the United Nations for ‘richer’ countries to contribute 0.7 per cent of GDP to foreign aid by 2013.  In this he carries on from Tony Blair who declared his support for working towards giving 0.7% of GDP for foreign aid at the G8 summit in Gleneagles in 2005.  The stubborn resistance of successive governments to even consider moving from this goal has led to concerns being raised that funds could be taken from vital areas such as defence in order to achieve it.

All too often the debate over foreign aid focuses only on the actual sums of money being given rather than whether or not the models for arriving at these figures and how the aid is used are actually contributing to the problems in Third World countries rather than solving them.

Back in the 1950s the idea of ‘richer’ countries contributing 1% of GDP to foreign aid was proposed by the World Council of Churches.  It was adopted by the UN in 1960 and revised to 0.7% after the Pearson Commission report of 1969.

Since then the world economy has changed dramatically.  Poor but stable countries such as in Asia have found it easier to raise money in capital markets and have not needed foreign aid past some initial assistance.  In other areas such as Africa the painful lesson has often been that foreign aid has served the people little as it has been stolen and squandered by despotic leaders and so these countries remain in perpetual need of more foreign aid.  In a hard-hitting report entitled The Ghost of 0.7%”, the International Policy Network argues that the 0.7% model is outdated and that donors should insist on good governance more than they have done in the past.  This report also highlighted just the month before the last General Election that “politicians tell us that increasing funding for unreformed international development is the only possible choice”.

The arrival of China as an economic superpower has somewhat blunted the argument that foreign aid can be used to bring about improvements in government in poor countries.  In their hunt across the globe for resources to fuel their booming economy, the Chinese have poured billions into areas such as Africa and Latin America building the infrastructure to bring out metals and minerals.  Countries with leaderships that are not wishing to comply with western demands for democratisation and reform are thus more likely to turn to the Chinese who are not likely to be looking for such changes in return for putting in their money.

An example of what some Africans themselves feel about British foreign aid was given in a letter to The Daily Telegraph of 22 August 2010.  Amongst others, Andrew Mwenda, editor of Uganda’s Independent newspaper and Kofi Bentil, lecturer at University of Ghana and Ashesi University, Ghana, called for “……British taxpayers to end their half-century-long experiment with ‘development aid’, which has, since its inception, stunted growth and subsidised bad governance in Africa……….A real offer from the British people to help our development would consist of the abolition of the Common Agricultural Policy, which keeps African agricultural exports out of the European marketplace”.  The writers of the letter went on to say: “It is that egregious policy, combined with the weight of regulations, bad laws and stifling bureaucracy, subsidised by five decades of development aid, which prevents Africans from lifting themselves out of poverty”.
The issue of what should be done with Britain’s Foreign Aid budget is a difficult and often emotive one.  Nobody wants to seem heartless and withhold help from the less fortunate overseas but it is clear that the present system is both wasteful and inefficient.  If it was to be reformed then money would be released to help the needy in Britain and the nations currently held back by it would have a better chance of standing on their own feet.

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