The Pitfall of the Debate about Aid

Over the last few months the debate about development aid has been very lively. But that debate holds a risk in that it hides the most important aspects of development cooperation behind a smoke screen. This is a pitfall we should not go for.
Development aid –money that rich countries give to help poor countries in their development– has been provided for about half a century. Many people take development aid to heart. Time and again polls confirms this; also the success of certain books points in that direction.

Dead Aid, the book by Zambian Dambisa Moyo is an example in point. The fact that Ghent’s large Vooruit theatre got filled on a hot September evening for a MO*reading by Moyo and Kumi Naidoo (president of Global Campaign Against Poverty), which was followed by reactions of Ruddy Doom (University of Ghent) and of Bogdan Vanden Berghe (Secretary-general of 11.11.11), is also evidence that people are interested in the theme.

This should not amaze us. In the Darwin Year it is becoming to point out that Charles Darwin wondered throughout his life how altruism, which people regularly display, could fit in his theory of evolution, which after all is based on the survival of the fittest – the idea that only the species and individuals that are best adapted to its environment will survive. Darwin himself did not find a sound answer, but researchers who followed his lead, found convincing evidence that shows how and why altruism agrees with the evolutionary theory.

So, it seems the debate about aid is very relevant. The position that people take in such a debate, helps them in giving form to their identity. Some consider aid to be the way to do something about worldwide misery and it helps them in defining themselves as socially involved. Others consider aid a waste; they state that the market will resolve the problems. All of which is part of their identity of cool analysts of reality. There is no problem with making the debate about aid part of your identity, on the contrary. This only becomes problematic when the view on reality is marred and people do not want to look at new evidence anymore.

The sensitive nature of the topic also explains why aid is sometimes a means to sell books. To sell books, it is indeed useful to summarize the book in a catching one-liner and/or to disclose some scandal or other. Books that ‘expose’ how aid does not help – with or without a whiff of deceit – have been doing very well lately. An example is Thierry Debels’ book that drags 11.11.11 through the mud on the cover but that does

Aid has many deficiencies…

A few of Moyo’s arguments certainly make sense: The flow of aid funds can disturb the relation between the leadership and the population of a developing country. He who pays the piper calls the tune. A leader who has to survive on taxes has to take into account taxpayers more than the leader who receives half of his budget from faraway countries. Even if these faraway countries do their utmost best to see that these funds are spent well.

Aid does release local elites of their social obligations: The taxpayer in the North pays, whereas the taxpayer in the South does not do anything. Moyo claims aid encourages coups and her colleague-writer professor Paul Collier found statistical evidence to corroborate this. Moyo does have a point but it does not mean she is right over the whole line.

Besides, a lot of her criticism is not new. And there is much more to be said about aid. There is existing criticism of Dirk Barrez, among others, on NGOs that are so busy with their own survival and their own small campaigns, that this fragmentation affects the effectiveness of all these campaigns to really make a difference in the field. And we do also know that during the Cold War East and  West hardly cared how aid was used as long as the Mobutus and Barres of the time stayed in the own camp. Once the Cold War was over, donors suddenly did start talking about good governance, human rights and democracy. This switch does not mean, according to professor Doom, that aid is still part of the soft power of countries: It helps them improving their position in the country concerned.

In Belgium it is quite well-known how corporations succeeded in instrumentalising aid: As long as we can supply locomotive engines – regardless of whether they will actually ride. An answer has been provided to this issue: Untied aid. Developing countries decide themselves where they buy their products.

We do know quite well how many developing countries, and the weakest ones among them first, are put under pressure to accept neo-liberal policies, which do not necessarily serve their own needs, in exchange of aid. When she was questioned about this during the Vooruit event, Moyo said ‘capitalism is the best system’. Apparently, subtle distinctions were lost to her.

…but is not necessarily useless

Because of all its deficiencies, some do away with aid altogether. As if people and societies are not able to learn. Moreover, the deficiencies do not dispel the effective results. That is the point of professor Patrick Develtere: ‘Aid is not the solution, but it can help. And there is good and bad aid.’

Also Paul Collier follows this balanced line. The Professor of Economics at the University of Oxford says ‘The book of my former student Dambisa Moyo has two weak points. One is the idea that aid is the main problem. That is not right: Aid is not that important and it has certainly not ruined Africa. Second, there is her belief that the money markets are a solution. The least you can say about this is that the timing is poor: The markets right now abhor risks.’

Even before the crisis capital flowed out rather than into Africa. Even Africans themselves export their money because they see few investment opportunities in their own country. In The Bottom Billion, a book that sold 100,000 copies, Collier claims that globalisation does not work for one billion people, who live in 58 countries: ‘Migration deprives these countries especially of their qualified people, in terms of trade they cannot beat Asia and they are not popular on capital markets. However, for 4 billion people in mainly larger developing countries globalisation has brought opportunities.’

Also in the debate about aid Collier is a go-between: He does share the above-mentioned criticism and in the course of his long career he also brought together an impressive array of data on aid and development to get a clearer view on the issue.

‘Indeed, I provide a rather nuanced view of development and aid. Our money cannot solve everything over there, but it does not mean that it never helps. These theatrically polarised positions are ridiculous. It is nice for ideological debates, but it does not help in resolving problems. I have come to take an intermediary stand on the basis of the best information available. I want to bring that information in an understandable language to the attention of part of the public opinion that wants to get informed and I do so to influence politics.’ Politics in the North, according to Collier have a crucial part to play indeed, if we want to prevent that the gap with the bottom billion does not get larger and larger.

No help needed any more for the 4 billion?

On the one hand, Collier puts the importance of aid and development cooperation into perspective with his position that the largest part of the developing countries is moving in the good direction and that development cooperation should focus on the bottom billion. However, not everybody will agree. Collier says India is a positive example, but the country counts 300 million inhabitants who are undernourished.

Collier: ‘The difference between Chad and India is not in the presence of poverty, but in one word: hope. In India the economy annually grows with 8 percent. It doubles every nine year. Millions of people lead a very hard life in India, but they know that their children will have a better life. The Millennium Goals are our way of looking at these countries; ordinary people look at their opportunities. Young Chinese go back to China whereas young Africans still want to leave Africa as quickly as possible. That is the difference.’ Possibly, though I would not want to provide board for all Indians who try their luck here. Collier admits that the difference between the bottom billion and the other developing countries is not absolute: ‘It is a continuum.’

Still, I too believe that the classical development cooperation is becoming irrelevant for a growing number of developing countries. Also because their increasing power will enable them in the coming years to align the world economy with their interests. The ascent of the Group of 20 already points in that direction.

Our contribution is essential for the bottom billion

On the other hand, Collier claims that classical aid, the transfer of money, cannot be the main way to help the bottom billion, but that development cooperation in a much broader sense is necessary to prevent that that billion remains at the bottom.

Collier describes four pitfalls that not only have brought these countries in trouble, but that also make it very hard for them to get out of trouble. Countries with low economic growth and low incomes are more likely to be experiencing violent conflict: In such desperate situation war provides young men with opportunities.

This is even more so in countries that have natural resources: In such a country you only need a share of the territory to earn money. Conflicts are a pitfall because countries can hardly get out of the conflict: Conflicts keep incomes low and growth down, which is a breeding ground for new recruits for the conflict. Also groups emerge who have an interest in maintaining a state of war. There are three other pitfalls for Collier: The possession of natural resources, the presence of bad neighbours and having no access to the sea, and poor governance in a small country. He supports this view with a lot of data and does at the same time put the importance of elections in perspective. For democracy to deliver good results just as much as elections, there is a need of institutions, such as free media and justice, that control the executive power.

Collier’s recipe for the bottom billion is not  to do away with aid. Sometimes aid is essential. ‘Landlocked countries will need help for many years to come, just to give the population a decent life. In post-conflict countries sustained aid does make a lot of difference. Well-timed aid can contribute to good governance. Poorly-timed aid does not do so. In countries with natural resources aid does not make much sense at all.’

However, aid is only a small part of the picture. Collier’s belief in the necessity of military interventions to restore order and keep the peace is definitely controversial. Collier pays little attention to the interests of the parties that intervene. National laws and international charters are more important. Rich countries have to make sure that their national laws do not stimulate the corruption of their corporate businesses and the support of their banks for dictators any longer.

Further, Collier advocates a whole series of international charters. A charter on natural resources should help countries to use these natural resources for the benefit of the population. Competitive contracting and transparency at all levels are crucial elements too.

‘Meanwhile, that idea has been picked up. Such a charter is in the making. Ernesto Zedillo, former president of Mexico, is overseeing the activities. I think this approach is more effective than having donors preach. Internationally supported rules and a civil society that observes compliance with these rules can bring about a strong dynamism.’

Collier also advocates charters for democracy and budget transparency. Also the World Trade Organisation (WTO) should take a very different stand. ‘So far the WTO has helped the richest countries; now it should do something for the bottom billion. Every round should start with what WTO will do for the least-developed countries, for instance, regulate the trade in commodities.’

More and more people seem to agree on this: Aid is not necessarily the most important component to achieve development.

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