Foreign Aid is getting a bad press. The latest assault is
contained in Jonathan Foreman’s book Aiding
and Abetting published by think-tank Civitas, which follows a slew of media
criticism of David Cameron’s decision to raise UK spending to 0.7 per cent of
GDP this year.
Yet there is only one aid mystery – why our support for
efforts to tackle global poverty is so misunderstood.
We have all heard the well-worn criticisms of aid. That it is
at best ineffective, and at worst pernicious, flowing to “kleptocratic
third-world rulers”. That aid is a “middle and upper-class enthusiasm”, and
that aid workers themselves are workshy rich-kids. That aid is simply a
political tool which politicians use to prove their credentials as caring
international statesmen at taxpayer expense.
The notion that aid is a bourgeois concern is demonstrably
untrue. In a ComRes poll in September a majority of those in the ‘DE’
socio-economic group thought Aid spending was either about right or too low.
Crucial C1 voters were less likely to think aid was too high than those in the
AB social group. This reflects a general respect for philanthropy throughout
the British population. As the Centre for Charitable Giving and Philanthropy
has shown, among households which give to charity lower income households give
more as a proportion of their income than those on large budgets, with those in
the bottom decile donating approximately 3% of their budget compared with those
in the top decile donating roughly 1%.
We often hear Clare Short’s criticism of EU aid initiatives
as “a disgrace”, yet the quote is rarely in context. Not only has a great deal
changed since those remarks in 2002, but Ms Short was not criticising the
amount of aid, nor highlighting inefficiencies in the distribution network.
Rather she took issue that 22% of EU aid spending went to middling countries
rather than poor ones. I agree that aid should be frontline, but some
co-operation will always be necessary. Working with international partners and
agencies helps overcome political obstacles, and allows help to get to where it
is most needed.
On the substance of aid policies, there is of course always
room for improvement. Yet, as the House of Lords select committee found, there
is no evidence demonstrating Aid creates worse outcomes. Evidence for quite the
reverse can be found in two of the ‘Asian Tigers’, Taiwan and South Korea.
The US offered about $60bn in grants and loans to South
Korea between 1946 and 1978. In the same period, the total amount of aid provided
by the US to the entire African continent was $69bn. Indeed Seoul’s position as
a vital piece in America’s global strategy against the USSR allowed them to
negotiate far better terms, building up large economic champions, or chaebols.
Taiwan received $1.4 billion between 1949 and 1963, an
amount which equalled 43% of gross investment and 90% of the flow of external
capital and donations. The presence of
large numbers of American troops in these countries has also contributed to
peace, preventing the warlordism that has so hampered capitalist democracy
taking shape in many poorer nations. This is not in any way to diminish the
achievements of the Korean and Taiwanese governments, but to recognise that the
enlightened self-interest of the United States, through aid spending, was a key
contributor to encouraging growth and private investment.
Britain has its own success story in this regard with India,
the beneficiary of the bulk of British aid in the 1960s and 1970s. While the
world’s biggest democracy still has many desperately poor people, it has also
created economic giants such as Tata and Arcelor-Mittal which have in turn
invested in and secured many British jobs in the 21st century.
It is this catalytic effect of aid that is its real power. When
governments invest, this creates a security that encourages private donors and
investors. According to the OECD, private giving made up 75% of total donor
flows from the rich-world nations on the Development Assistance Committee,
while private creditor flows to developing countries amounted to $775bn in 2012,
around 6 times that given by governments in aid. Far from throwing taxpayer
money at basket-case economies, aid paves the way for far greater influxes of
investment and economic returns we all benefit from. For aid isn’t just about
preventing harm, but doing good. It costs £2.20 to inoculate a child against
polio. Yet that inoculation doesn’t just save a child and their family from the
medical costs of treatment, but adds all the economic value that person will
create over their lifetime. The costs are known and tiny. The returns are
infinite. For an enlightened investor, targeted aid is the ultimate put option.
This economic potential is of course improved by education,
and here my own experiences with the Build a School programme contrast with the
caricature. There are no Chelsea teenagers in Land Rovers, who perhaps would
lack the skill-set for making and hefting bricks in the African sun. Rather
there were local people using the money to build assets they treasured, to give
their children skills to work themselves out of poverty. The jobs of building
and teaching create further ripples in the local economy, and the creation of
this new asset helps not only with the poverty of materials, but with the
poverty of aspiration that can afflict isolated and forgotten communities. The
security that government aid funding brings in terms of paid employment allows
for specialisation, investment and security, as people have the economic
breathing space to move away from subsistence farming to creating greater
value. The way local people, particularly women, seize these opportunities at
once dismisses any notion of paternalism. This is a partnership.
Nations worldwide have been built on the progressive
development of agriculture, education and towns. Just like individuals, aid catalyses them to
move from receivers of help, to self-sufficiency, to contributors to the global
economy. 16 European countries have committed to spending 0.7% of GNI by 2015 on
aid to the very poor, and 5 have already reached that target. This isn’t much when we still have 1.4
billion of our fellow world citizens living on less than $1.50 a day. 25,000
die every night from starvation. Solving this cannot be beyond the ken of humanity.
Britain’s role as an outward facing nation with unmatched internationalist
credentials presents an opportunity to be a world leader in helping developing
nations, and forging the links which will, in turn secure our own future as
these economies grow and prosper.
Austerity cannot be an excuse to retreat to
fortress Europe, or even worse fortress Britain. This second age of
globalisation cannot end as the first did, in economic stagnation and
isolationism. Aid is not a soothing salve for our consciences, it is the spark
which ignites the inner potential of people in the developing and developed