Over the past half-century, rich donor nations have funnelled $2.3 trillion U.S. into foreign aid. That's about $80,000 for every person in Canada, and 23,500 times more than the world's highest-paid athlete, Tiger Woods, earned last year. Yet all that money hasn't made poverty history. Not even close.
In Africa, the world's poorest region, half the population lives on less than a dollar a day. Life expectancy is actually falling, averaging just 46 years.
Thirty years ago, the average income in sub-Saharan Africa was double that of South and East Asia. Today, after decades of aid, it's less than half.
This dismal state of development both stokes the HIV/AIDS pandemic ravaging the continent and severely complicates efforts to combat it.
As author William Easterly observes in The White Man's Burden, his indictment of western efforts to eradicate poverty, all that aid hasn't even provided the cheap fixes that could save millions of lives. Medicine that would prevent half of all malaria deaths, for example, costs just 12 cents a dose. A bed net that would protect a child from getting malaria costs $4.
Why hasn't aid had more impact? Easterly, a former World Bank economist, blames "Planners," well-intentioned westerners who devise utopian schemes designed to lift impoverished nations, holus-bolus, out of their misery -- a modern incarnation, he says, of the white man's burden mentality of colonial times.
This top-down approach has mostly been a disaster, he says. It's unco-ordinated and unaccountable. By trying to do too much, it ends up doing little. It promotes western values and institutions that often can't be externally imposed. It ignores past failures and embraces more of the same. It channels billions to corrupt leaders -- gangsters, Easterly calls them -- who steal or squander the money. And it measures success by the volume of aid dollars pledged rather than the results they generate.
Easterly's analysis is controversial. But many now agree that, despite some notable successes, official aid is at a crossroads and fundamental changes are urgently required.
"I don't think more aid, in the way that it's being used now, is the answer," says Molly Kane, executive director of Inter Pares, an Ottawa-based NGO. "In fact, if there's more aid that's not spent better, it can often cause more damage."
The critique of aid is lengthy and varied. Here's a primer on some of the key concerns.
Now you see it, now you don't
To make a difference in the lives of poor people, aid must be real, says ActionAid, a Johannesburg-based anti-poverty group. But in fact, it says in its report,
Real Aid 2, almost half of all aid in 2004 was "phantom" -- aid that was either poorly targeted, double-counted as debt relief, tied to donor goods and services or badly co-ordinated and highly conditional. Nearly 40 per cent of Canada's aid fell into this category, it says.
One quarter of global aid, $20 billion in 2004, was spent on one of the most heavily criticized form of aid, technical assistance -- consultants, trainers and other outside experts, usually from donor nations. Much of it isn't needed by recipient nations, who accept it only because it is a "free good." Because outside experts often know little about local conditions, their advice is frequently ineffective, or even counter-productive. And they make out like bandits, typically earning $1,000 a day.
"Unless donors rise to the challenge of reforming technical assistance, and thereby ensuring that the scaling up of aid leads to tangible results," warns Real
Aid 2, "the wider development system risks becoming so discredited that there will be a rapid falling off in public support for aid."
The ties that undermine
Then there's tied aid -- aid that must be spent on goods and services from donor nations. According to estimates from the Organization for Economic Co-operation and Development (OECD), tying aid increases costs by between 15 and 40 per cent by eliminating competitive bidding. And, notes Roy Culpepper, president of the Ottawa-based North-South Institute, it means poor nations can't spend aid money on goods and services in their own countries. "That would be a double whammy," he points out.
In 2001, donor nations agreed to untie aid to least developed nations. But five years on, says Real Aid 2, "progress from some donors has been woeful." The United States still ties 70 per cent of its aid. And Canada is among the worst offenders, tying 47 per cent of its aid in 2005, according to the Centre for Global Development.
The strings that hobble
That awful bureaucratic word, conditionalities, conceals a multitude of sins. Through the 1980s and 1990s, they most often took the form of "structural adjustment programs" imposed by agencies such as the World Bank and the International Monetary Fund. The result was deep cuts to social spending with little or no improvement in economic performance -- in effect, greater poverty.
After that unhappy experience, structural adjustment was jettisoned in favour of Poverty Reduction Strategy Papers, or PRSPs in the acronymic lingo beloved by bureaucrats everywhere.
Nominally intended to let countries design their own strategies to reduce poverty, critics say PRSPs have replaced binding conditions with even more numerous "guidelines." Some say this amounts to little more than ventriloquism, with donors making their policy expectations clear and recipients responding accordingly.
"At some point," argues Easterly, "the donors just have to trust the recipients to be self-reliant enough to follow their own interests."
Those stingy donors
Aid levels fell sharply during the 1990s, but began to rise again at the turn of the millennium. Last year, development assistance hit a record $106.5 billion, about $27 billion more than in 2004.
But hold the happy dance. Debt relief for two countries -- Iraq and Nigeria -- accounted for most of the increase. (Donors can include the full value of cancelled debt as official aid, though recipient countries save only the cost of debt service, a much smaller number.)
Not counting debt relief, aid spending rose 8.7 per cent in 2005. Canada's total of $3.7 billion -- about a quarter of which went to sub-Saharan Africa -- was inflated by $455 million in debt relief and a one-off increase of $320 million. Barring a change, Canadian aid will actually fall next year.
Most donor nations are still committing far less than the UN target of 0.7 per cent of Gross National Income to aid. Last year, only five nations met the target. Canada was at 0.34 per cent, about average for all OECD donor nations.
Since 2000, Canada has ramped up aid by eight per cent a year to meet a commitment to double it by 2010. But that won't get us closer to that elusive 0.7 target. In fact, Canadian aid is expected to decline as a proportion of GNI, dropping to 0.30 per cent by 2007.
Even at $100 billion plus, aid spending pales in comparison to the $1 trillion the world spends annually on the military. "If we can spend $1 trillion on arms," asks Culpepper, "can we not spend more than $100 billion on aid?"
First, do no harm
In a widely read critique of last year's Live 8 concerts, Cameroon columnist Jean-Claude Shanda Tonme argued that aid to Africa has helped entrench authoritarian regimes. It's a view widely shared in Africa. In 2002, Easterly reports, the world's 25 most undemocratic government rulers received $9 billion in foreign aid.
In a recent working paper issued by Britain's Overseas Development Institute, African civil society organizations were ambivalent about the merits of increased aid, fearing both its impact on their countries and the agendas of donor nations.
Too much aid can distort wages and exchange rates, reducing competitiveness. It can undermine democracy by making African governments more accountable to donors and lenders than to their own electorates. And it can further entrench unhealthy aid dependency.
Lies, damned lies and promises
Donor nations are splendid at making promises. They are rather less accomplished at keeping them. At their summit last year in Gleneagles, Scotland, the G8 leaders made a raft of promises, hailed as historic.
Among other things, they promised to double aid to sub-Saharan Africa by 2010, cancel 100 per cent of the debts owed by some of the world's poorest countries and strike a trade deal that would spur African development.
A year later, progress has been less than stellar. The University of Toronto's Munk Centre rated progress on each of the G8's 21 priority commitments at Gleneagles and calculated an average compliance rate of just 65 per cent. Even so, that was the second-highest level of compliance of any summit in the past decade, a telling commentary on broken promises.
They did well on debt relief for Africa, which rated a perfect 100. But funding for the battle against HIV/AIDS rated a score of just 33 per cent. The key promise to double aid to Africa rated a dismal 22-per-cent compliance score. And the trade promise scored a fat zero -- even before the collapse of the Doha round of trade talks last month extinguished African hope for relief from trade-distorting subsidies and tariffs.
According to DATA, an organization founded by U2 singer and activist Bono, the G8 collectively increased aid to sub-Saharan Africa by just $1.6 billion last year -- less than half the promised amount. DATA says Canada's contribution to the region actually declined by $10 million, adding that G8 nations must pony up an extra $4 billion this year to get back on track. Will they do it? The record doesn't inspire much confidence.
Shifting priorities
Since Sept. 11, 2001, the security concerns of donor nations have increasingly influenced aid spending. According to the 2006 Reality of Aid report, almost all the increase in U.S. assistance between 2002 and 2004 -- some $20 billion -- went to strategically important countries in the Middle East, Afghanistan and its neighbours.
In 2002, the mandate of CIDA, which disburses most Canadian aid, was updated to include the phrase "to support international efforts to reduce threats to Canadian security." Not coincidentally, Afghanistan and Iraq have become the largest recipients of Canadian foreign aid, though neither has traditionally been a major aid partner.
The use of aid money for geopolitical reasons instead of poverty alleviation is "a very dangerous trend," says John Foster, the North-South Institute's principal researcher. "That money could be being used in Africa."
... And the left hand taketh away
Through other policies, donor nations have more than cancelled out the value of their aid. The British charity Christian Aid calculates that over the past two decades, Africa lost the equivalent of $270 billion just from the negative effects of trade liberalization on growth.
For every two dollars Africa has received in aid, it has paid back nearly a dollar in debt payments alone. ActionAid estimates that debt repayments, capital flight, unfair trade profits remittances and rich countries' contribution to climate change produced a net resource flow of $710 billion from developing countries in 2003 -- 10 times the value of official aid.
Even the $18 billion in debt relief granted last year to Nigeria is less than it seems. In exchange, Nigeria had to pay its rich-nation creditors $12.4 billion in debt- servicing arrears.
And the collapse of the Doha trade talks means Africa will continue to be flooded by subsidized chickens from Europe and subsidized cotton from the United States, devastating African producers who could otherwise supply those goods more cheaply and efficiently.
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Other western policies that harm Africa
Conventional wisdom takes for granted that we in the West are Africa's benefactors. But looking at the various ways that Africa and the West interact, it might be more accurate to say that policies of western governments and institutions actually do more harm to Africa than good. After all, each year far more money pours out of Africa into western banks and western multinationals than Africa receives from all western sources combined. Consider the following:
Foreign Direct Investment (FDI)
Problem: Sagging African economies will get a boost if foreign companies fund projects in Africa, say proponents. But the paltry flow of FDI to Africa -- less than three per cent of the global total in 2004 -- has focused on just a few industries, such as mining and petroleum, say critics. Foreign companies often use their own nationals to manage these operations, leaving Africans with low-level jobs. At the same time, African governments often lower taxes and labour standards to attract foreign companies, leaving little tax revenue in Africa while profits get repatriated. Zambia's copper mines are a case in point: foreign mining companies pay a royalty tax of just 0.6 per cent.
Solutions: FDI is not inherently bad, say NGOs, but it needs to be balanced with investment in small and medium-sized African businesses. Developing these businesses would make African countries less dependent on imported manufactured goods and less vulnerable to market fluctuations of their raw, exported materials. African countries also need capital to develop their roads and ports, so that more businesses -- not just resource-based industries that can afford to build their own roads -- might invest there.
Intellectual Property Rights (IP)
Problem: In 2003, the World Trade Organization ruled that poor countries could temporarily import cheap, generic antiretroviral (ARV) drugs from other countries to deal with the HIV/AIDS crisis. But the plan's regulations and bureaucracy are so complicated that no country has actually imported or exported drugs under the scheme. Canada pledged to produce generic versions of patented ARVs in 2003, but three years later it has not exported any drugs to Africa. Instead, many poor countries rely on generic ARVs from India and Brazil, which under a previous WTO agreement can produce generic versions of drugs that were not developed after 2005. This is a problem since new drugs are needed to fend off AIDS as patients develop resistance to old drugs.
Solutions: The WTO must make it easier for generic drug companies to supply poor countries with bulk quantities of ARVs, say organizations like Medecins sans Frontieres (MSF). Indigenous manufacture of generic drugs should also be encouraged: Aspen Pharmacare in South Africa already makes a wide range of generic drugs -- a version of Roche's Tamiflu, most recently -- and countries such as Uganda, Kenya and Zambia are hoping to develop similar capacity. Countries like Canada that have tried and failed to export generics should play a lead role to highlight problems with the current WTO plan.
- How Canada's drug pledge fizzled, C1
Brain Drain
Problem: Africa's most educated people -- particularly its health-care professionals -- are leaving the continent in droves to pursue better salaries and more political stability in Europe and North America. As a result, African governments are spending their education budgets to fund labour demands in the West. The exodus of well-educated Africans impedes the growth of a stable middle-class and forces African governments to hire expatriates for high-level jobs. While the United Kingdom (the largest destination for emigres) has banned official recruitment from developing countries, private nursing homes and recruitment agencies are still drawing large numbers of doctors and nurses.
Solutions: Western countries should stop "poaching," or actively recruiting, the professionals that Africa needs most. Temporary solutions, such as an emigration tax, have been proposed, but the most urgent need is improved salaries, benefits and working conditions for civil servants in Africa. For example, Britain's Department for International Development made a five-year, $210-million commitment to health care in Malawi with a focus on raising salaries. After just nine months, the exodus had slowed considerably and 450 new health-care workers had been added.
Faith-based Initiatives
Problem: When George W. Bush pledged billions of dollars to fight HIV/AIDS in Africa in 2003, critics attacked the president's plan to devote part of that money to programs that promote abstinence over condom use. Countries that have invested heavily in condom distribution and education campaigns have seen real decreases in their numbers of HIV infections. The Vatican has been another prominent and vocal opponent of condoms, going so far as to suggest that they are not reliable in the fight against HIV/AIDS.
Solutions: Some Christian organizations, such as World Vision Canada, have said that a "realistic" approach to stopping the spread of HIV/AIDS should involve promoting abstinence, faithfulness and condom use. Other religious NGOs, however, have been more steadfast in refusing to acknowledge the role that condoms play in fighting HIV/AIDS. Religious organizations, however, are powerful in many devoutly Christian countries in Africa; many secular NGOs now partner with church leaders to educate people about HIV/AIDS and to fight the stigma currently associated with the disease.
Debt
Problem: The promise of 100-per-cent debt relief for 14 of the poorest African countries got lots of attention at the G8 meeting in Scotland last year. But African countries still labour under a cumulative debt load of as much as $300 billion U.S. And while aid to sub-Saharan Africa is estimated to total $25 billion a year, the Jubilee Debt Campaign calculates that African countries pay more to service their debts than they receive in aid. Debt-relief promises are no instant panacea, since they only come into effect as loans come due, and have only a symbolic effect in the poorest countries, which weren't making payments anyway.
Solutions: The IMF says that debt-relief packages have already forgiven a total value of $35 billion. But critics say struggling African economies will not develop without full debt relief -- and the obligation to forgive the debt is not just moral, but legal, since much of the debt was accumulated by corrupt leaders for their personal benefit with the tacit acceptance of western lenders. To avoid further "odious debts," Probe International cautions that new loans to leaders with checkered pasts, such as the Republic of Congo's President Denis Sassou-Nguesso, should be closely scrutinized.
Corruption
Problem: Paul Wolfowitz's tenure as World Bank president has been marked by a focus on corruption: this year, loans to Chad, Kenya and Congo have been frozen or postponed due to concerns about corruption or misuse. While no one denies corruption is a problem, critics say that it's a convenient excuse that blames Africans and absolves westerners for Africa's problems -- and they note that loans to Chad were resumed in late April after Chad's president threatened to cut off oil exports.
Solutions: It takes two to tango: the briber and the bribee. NGOs argue that western lenders must take responsibility for holding aid recipients accountable for the money they receive and avoid propping up oppressive regimes and enriching their leaders. On the ground, efforts to increase public access to information, civic participation, and transparency in government are crucial.
Economic policy
Problem: Loans often come with strings attached. According to a report by the European Network for Debt and Development, poor countries face an average of 67 conditions per World Bank loan. Uganda had 197 conditions attached to a 2005 loan. Many of these conditions dictate controversial economic policies such as trade liberalization and privatization: for instance, recent conditions demanded the privatization of the Bank of Mozambique and the Zambian Telecommunications Company. The 2003 privatization of the Tanzanian water supply, supported with a $61.5-million loan from the World Bank, was reversed in 2005 after millions of people were left without access to clean water.
Solutions: Not all conditionality is bad -- for instance, anti-corruption conditions are widely supported. But NGOs criticize the ongoing practice of tying aid to structural reforms that may end up hurting the poorest people in the country, and that are against the wishes of the elected government. The British and Norwegian governments have formally rejected tying their development aid to privatization and trade liberalization, according to the NGO Eurodad.
National Sovereignty
Problem: African countries are so reliant on organizations such as the IMF and the World Bank for loans that they're forced to accept whatever conditions these institutions demand in order to secure capital. The IMF and World Bank are committed to free market principles and often require African nations to open their markets or privatize their national industries as conditions for funding. NGOs say this amounts to neo-colonialism as the western countries that run the IMF and World Bank can indirectly dictate African affairs.
Solutions: International financial institutions need to reconsider the conditions they impose on African countries when they make loans. African countries need to be given more ownership and input into the loans process in order to ensure that the needs of their citizens are being met. Instead of solely focusing on macroeconomic results, such as low inflation, the IMF and World Bank should also consider political, social or environmental changes as conditions for their funding. In particular, they need to recognize in their analysis the dramatic impact that HIV has had on workforces and economies.
Trade
Problem: Africa captures just one per cent of the world's trade, according to a 2005 Oxfam report. Poor countries face an unfair trade system in which the United States and Europe subsidize their agricultural industries and export crops at prices far below their actual production costs. These crops can be dumped into African countries, making it harder for African farmers to sell products in their own countries. At the same time, African countries still don't have duty-free access to many rich countries' markets.
Solutions: Export subsidies need to be eliminated, say NGOs. Specific timelines need to be set in order to eliminate unfair subsidies on specific products like cotton, which the United States currently exports at 35 per cent of its actual production costs. At the same time, African countries need easier access to rich countries' markets. Poor countries also need to be fully consulted at world trade talks, and negotiations need to be adequately reported to all participating countries.Ottawa Citizen
