Overseas aid is quickly becoming something of a totem for those who want to avoid difficult budget decisions at home. In their eyes, whatever real or imagined pain arising from fiscal restraint could be avoided if only we didn’t have a budget for assisting the poorest countries on earth.
Yet, as Tim Montgomerie said here two weeks ago, cutting the aid budget would still leave 90% of the UK deficit untouched. But doing so would come at the price of depriving many of the world’s poorest and hungriest children of life-saving medicines and food.
Overseas aid, when delivered effectively, serves a clear national interest and is supported by a strong business and moral case.
Since becoming Secretary of State for International Development, Andrew Mitchell has made aid effectiveness and value for money the top priorities for his Department; to ensure that every penny of UK aid really does make a difference in reducing global poverty.
The arguments for and against aid are now well rehearsed, but in the five years I have been visiting Rwanda, I have seen first-hand the dramatic progress that country is making in reducing poverty, thanks in part to the UK’s support. UK aid is making a huge difference, saving children’s lives, and helping get almost all of Rwanda’s children into primary school. Rwanda is verifiably on course to achieve many of the UN’s Millennium Development Goals (pdf).
This represents value for money in itself, but Rwanda shows us how aid can not only deliver results, but can help put countries on track to rely less and less on aid in the long-term. When recipient countries take greater ownership over aid spending in their own country, and when aid ensures countries can mobilise their own financial resources, a developing country is placed on a course where its dependency on foreign aid will be reduced.
The ActionAid report "Real Aid 3", published today (pdf), shows us that in 2000, 85% of Rwanda’s budget was made up of donor money. In this year’s national budget, that figure is down to 45%. This remarkable reduction in aid dependency is as a result of a really effective use of UK aid.
When DFID can trust a recipient government to spend aid money effectively, and make it transparent and accountable, it will give more responsibility to that country by providing more money as general budget support – confident that Rwanda’s increasingly effective civil service will deliver the kind of results we expect of our own government departments. In July, Project Umubano for the first time worked in the Rwandan senate to train Senators and their staff to better scrutinise government policy, so that even more accountability is built into Rwanda’s key institutions.
More than that, ActionAid reveals the full fruit of the early assistance DFID gave to overhaul Rwanda’s Revenue Authority. Between 1998 and 2006, Rwanda quadrupled the amount it collected in taxes, and it now collects the value of the original UK grant every four weeks, meaning that it can rely on its own resources to build more schools and hospitals. It’s vitally important that DFID continues this type of work.
UK aid money, then, is not just about saving lives, as important and morally right that this is. But the real value for money it provides is setting countries on their own paths for development and, as ActionAid reveals, UK aid money is leading the world in providing the best value for money in aid spending. Along with DFID’s important emphasis on private sector growth, recipient countries are actually reducing their dependency on hand-outs, and are making full use of the hand-up that UK aid can give them.