Mar(k): Travel, Hiking, and "Doing Good"

musings on our life of travel and volunteering

Dead Aid?

with 3 comments

There has been quite a bit of press recently criticizing aid giving, with critics using individual examples of failure, to argue that all aid is ineffective and should be reduced or phased out all together. Given our current roles in Ghana, we thought we should make an attempt to address this issue.

In 2008 Ghana, ranked 142nd on the Human Development Index (Australia is 4th),  had a population of 23 million, a GDP of US$16.7 billion and received US$1.3 billion in aid. This works out at about 15 cents of aid per person per day…..not a whole lot!

So, is the situation getting worse, as critics of aid maintain? In fact, on a raft of metrics, Ghana is doing remarkably well:  29% of the population live below the poverty line today compared to 52% in 1992; 82 % now have improved drinking water compared to 54% in 1990, and 13% now have improved sanitation, up from 7% in 1990 (yikes, still a long way to go there!). Gender parity has almost been achieved at primary and junior secondary school level, guinea worm has almost been eliminated (96% drop in cases!) and infant mortality has declined over 30% in the last decade……..

And the story in Ghana is not unique, similar improvements are being witnessed across Sub-Saharan Africa (the world’s poorest region). Take a look at the following plots if you need convincing (clicking on them will allow you to see an enlarged version of the graphs):

OK, so the cynics among you are probably (correctly) saying that these improvements can’t be just due to aid. There are, of course, a number of factors contributing to these successes, but the fact that in the past decade four million more people are receiving treatment for HIV and AIDS, more than four million children now survive past the age of five, and the enormous rise in the number of children going to school are all signs of aid that works!

In one area, though, the critics are undoubtedly correct; too much aid is squandered through inefficiency, misallocation and regrettably, corruption. But surely this is an argument for aid to be “fixed”, not abandoned? This is currently an area of much attention by aid donors and there is no doubt we are learning from our past mistakes. Today, there is little doubt that the majority of aid is given much more transparently, and comes with conditions to ensure that it is spent accountably on what it was intended for – and the results speak for themselves.

So, should we sit back on our haunches and congratulate ourselves for a job well done? If only! Despite these successes, in sub-Saharan Africa, almost one child in seven dies before their fifth birthday. Worldwide, 350,000 women and girls die each year as a result of complications of child bearing. Recent figures suggest some significant progress, but sadly, rates are actually increasing in some countries in sub-Saharan Africa. And despite great progress, UNESCO estimates that on current trends 56 million children of primary school age will still be out of school in 2015. Girls in particular still face enormous hurdles in accessing education, especially as they grow older. Just visit the market with us here in Tamale if you want any proof that an army of tiny girls spend their days hawking foodstuffs or carting water, instead of attending school.

In 2009, total aid from the richer countries to poorer countries totaled about US$142 billion. Sounds like a lot, but to put it in some sort of perspective, let’s compare this to the remuneration of those pillars of society, the investment bankers. On 15 January this year, the Guardian Weekly reported that “the world’s biggest investment banks are expected to pay out more than $65 billion in salaries and bonuses this week and next”. That’s right, the 2009 bonuses of investment bankers was about half the amount we expended on aid to the developing world! In fact, in a magnanimous gesture, the virtuous souls at Goldman Sachs reduced their planned bonuses from over $20 billion to $17 billion (which is still larger than Ghana’s GDP!).

Africa was hard hit by the global economic crises and desperately needs more (well directed) aid. According to the World Bank, Africa is likely to receive less than half the additional aid that donors agreed to provide at the supposedly groundbreaking Gleneagles summit in 2005. Despite this increasing need, development aid is significantly less than the United Nations target of 0.7% of gross national income. We can hardly argue we haven’t had time to reach this target – it was set in 1970! Have a look at the figure below and see how your country is performing:

Perhaps you’d care to ponder why some North European countries have no difficulty exceeding this target whilst equally rich countries such as Australia and Canada fall woefully short?

We’ll finish with a quote from Oxfam: “while aid alone cannot solve the deprivation experienced by people living in poverty or redress the extreme imbalance of wealth that characterises our world, good quality 21st century aid not only saves lives, but can be indispensable in unlocking poor people’s ability to work their own way out of poverty.”

As they are apt to say here in Ghana, Amen.

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Written by Mar(k)

July 15, 2010 at 2:35 pm

3 Responses

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  1. Beautifully written piece.

    It has always seemed to me that there has to be a way of bringing the concept of ‘aid’ more into line with a concept of ‘sharing’. The idea that ‘rich’ countries are providing handouts to countries that ‘don’t help themselves’ is an entrenched one, and maybe that is the reason that representatives of these wealthy countries attend conferences where they offer a particular figure, only to find that they have enormous difficulty actually getting that money physically paid?

    The northern European comment is interesting. Perhaps these countries are not so tied to the idea that there has to be a ‘return on investment’ when allocating aid funds? Perhaps at a fundamental level, these countries see it as being more important to share and participate than to take and exploit?

    It would be an unfortunate outcome for targetted foreign aid to be reduced, as it is likely that Africa will be a major target for hard and soft commodity players in the coming decades, and without better skills and infrastructure being put in place (and soon) then it is likely that the benefits from any such activity will flow directly to foreign hands rather than remain in the respective companies to fund further development. i think Mar posted an article about the ‘land-grab’ for agriculture and there was the article about Ghana’s major resource projects resulting in little net benefit to locals.

    It’s a difficult area to tackle, isn’t it?

    Michael

    July 19, 2010 at 5:57 am

    • Thanks for your (as ever) learned comments Michael. Some critics maintain that foreign direct investment (FDI) should largely replace aid. Whilst this is a laudable objective, according to Oxfam “currently, FDI contributes only 2 per cent to the GDP of African countries. In the poorest countries, it is little more than a footnote to
      the overall economy.” They suggest the reasons for under-investment include market size, geographical location, cost and availability of skilled labour, infrastructure, and political stability. The unfortunate reality is that “for the foreseeable future, there simply is not enough of FDI to fund development on its own.”

      Mar(k)

      July 22, 2010 at 4:23 pm

  2. Hi again Mar(k),

    i agree with your comments regarding the foreign direct investment. The current global economics are rewarding speculative, short term positions and there is very little money available for genuine, long-term investment outlooks. Given the scarcity of capital and the dramatic deficits (structural in most developed countries) that will need tackling in the next decade, my thoughts are that it would be highly unlikely that these countries will be able to even maintain current levels of aid.

    However, individuals are more and more likely to contribute to genuine development programmes than ever before (i’m not arguing some Enlightenment version of ‘progressive civilisation’ inevitability but more a statement of the creeping awareness of a globally shared future that is leading more and more people to see the need to cater for more than just their local community needs). So perhaps there is a lot more that could be done in bringing together individual contributors to managed fund pools that fund micro-businesses in developing countries? i know that the ex-investment chief of Colonial First State (Chris Cuffe)pretty much took early retirement to devote himself to this.

    Of course, Africa will eventually be seen as a strategic area in the mighty tussle of power blocs, and it is unfortunately likely that the bulk of international assistance will come from that form of competitive posturing rather than any genuine attempt at humanitarian or cultural assistance purely for its own sake. The Chinese need to lock in resources will most likely see large amounts of capital directed to Africa for that purpose. It may be a good thing in the end, as the US/Euro blocs attempt to maintain prestige and ties through competing efforts.

    The most common argument i have heard in regards to foreign aid, is the idea that only a small part of the money actually ends up in the respective country – it is all gobbled up in admin fees and costs. Perhaps this is an area to also be tackled, and improving the communication of that might help increase regular donors?

    It’s hard to ponder or comment on such things without any words appearing trite, condescending or ignorant. In such circumstances, my little neurons usually start seeking out fault lines in communications, as it is often here that true reasons for outcomes can be found – and if so, that’s neat because communication can be helped by individuals and groups of individuals in ways not possible only a little while ago.

    And hope is an eternal fruit.

    Love your work – very proud to know you both.

    Michael

    July 23, 2010 at 1:34 am


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