Experts debate the effectiveness of aid

Prime Minister Stephen Harper recently travelled to three countries in sub-Saharan Africa, where he stressed the importance of economic trade and investment to the process of development.

Canada’s federal budget this year contained a cut to the Canadian International Development Agency’s (CIDA) funding amounting to well over $300 million.

Many are now advocating trade and investment as an alternative to aid. Outside investment in Africa now exceeds foreign aid, according to the Organization for Economic Co-operation and Development (OECD).

Reflecting on these developments, many commentators are debating the significance of the role of aid in economic development.

Aid policies have been the subject of much scrutiny in recent years.

The most well-known, and perhaps infamous of these critics has been Dambisa Moyo, an economist and author of the best-seller Dead Aid.

In her book, Moyo provocatively wrote, “Aid has been, and continues to be, an unmitigated political, economic, and humanitarian disaster for most parts of the developing world.”

Perhaps unsurprisingly, this created quite a backlash amongst supporters of aid.

Ian Smillie, a development consultant and author who has worked in development for several decades, called Moyo “the darling of people who dislike aid.”

“I think most of what she says is a crock,” Smillie said. “She’s simplified everything and pandered to a popular viewpoint,” providing ammunition for governments to cut their aid budgets.

Others say she makes some reasonable points.

“At a certain level she’s right,” said Professor Chris Brown, who teaches development studies at Carleton University. “If we look at all of the money that’s been spent over the years on aid, it’s very hard to see what the return is.”

Moyo claims that over a trillion dollars of aid has been spent on Africa by the outside world, with little to show for it.

Aid advocates point to past successes of donor-funded projects.

John McArthur, a development economist and senior fellow with the United Nations Foundation, defended aid policies, speaking over the phone from New York City.

“There have been many examples where aid has led to tremendous results,” he said, particularly in education, health, and agriculture. He specifically mentioned the eradication of smallpox, huge declines in deaths from Malaria, and antiretroviral treatments for HIV/AIDS.

Mark Fried, a policy coordinator with Oxfam Canada, agrees.

“We wouldn’t have made the gains in maternal and child health in the last 15 years without aid,” he said.

Fried offered South Korea as an example of aid working effectively.

“50 years ago, Korea was poorer than Sudan,” Fried noted. Then it received a great deal of aid from the United States in the 1950s and 1960s. “They used it well, and now they’re one of the rich countries. They’re actually giving aid now.”

Professor Brown said the positive impacts of aid are overblown.

“One of the biggest fallacies we have in the West is the notion that aid equals development, [and] that the only source of development is aid.”

Brown pointed out that aid represents a relatively small amount of the capital flows of developing countries. “Aid is actually a relatively small portion of the development agenda,” he said.

“The developments in the aid industry are not the driving force for the new developments in Africa,” Brown argued. He said foreign investment from China and the West are much more important.

Canada has over $21 billion invested in African mining alone, according to Lucien Bradet, president of the Canadian Council on Africa. He said Canada and Africa do $13 billion a year in trade, which increases by 10 to 15 per cent every year

Professor Dane Rowlands, the director of Carleton University’s Norman Patterson School of International Affairs, said these numbers are fairly insignificant.

“The bulk of Canadian trade is north-north trade [with other developed countries]. We don’t engage in a lot of north-south trade because developing countries tend to export resources that Canada already has an abundance of.”

Ian Smillie said critics inaccurately portray aid supporters as saying aid is the only form of development.

“I don’t think anybody serious in the aid business thinks that aid is the only answer,” he said.

“We’ve never said it’s all aid and no trade, [so] forget about trade,” Smillie said.  “Trade is much more important,” so long as it’s conducted on equal terms.

McArthur said trade is very important for development, but it’s not necessarily going to help basic services such as healthcare.

Healthcare and education are the two most important factors in development, according to Fried. “If you’re sick and you’re illiterate, you have a really hard time working your way out of poverty.”

Fried said these services are best provided by governments, and foreign aid can help.

“In the poorest countries, governments can’t afford to do it,” he said. “We think the best aid is aid that provides direct support to government budgets [and] allows governments to provide the basic services that poor people need to work their way out of poverty.”

Shannon Kindornay, a researcher with the North South Institute, said the level of significance aid plays to development varies by region. For example, it plays a larger role in sub-Saharan Africa than in East Asia.

“Yes aid matters, of course it matters, but it really depends where you live,” she said. “It would be inaccurate to make some kind of grand statement that aid is less important than trade and investment. If you live in Palestine, that’s not necessarily the case.”

The role that trade and investment play also depends on the country.

Professor Rowlands said countries moving into the middle income range are benefitted much more from trade than aid.

McArthur agrees and said aid should therefore go to poorer countries.

“Aid should be overwhelmingly focused on the lower income countries, and much less focused on the middle-income countries,” he said

Fried also said aid should go to countries that need it the most, but unfortunately Canadian aid doesn’t always work that way.

“There seems to be a desire to focus on those countries where Canadian mining companies operate, or those countries where there may be some Canadian trade advantage,” he said.

Smillie is quite critical of Canada’s aid agency.

“I think it’s in such a state of disrepair that it’s hard to imagine a time when it was worse,” he said. “I certainly can’t remember a time when it’s been as bad as this and when the morale in the agency has been as low as it is.”

“A lot of the problem is political. It’s coming from above CIDA. The department […] is being micromanaged.”

Smillie said the agency is far too centralized.

“The centralized authority means that the minister’s office has to sign off on just about everything,” he said. “You’ve got to allow the professionals to manage [the projects].”

Kindornay said one problem is that Canada doesn’t have one coherent development framework, so it’s hard to coordinate aid with other potentially related policies such as trade or immigration.

“Canada doesn’t actually have any kind of formal plan or operationalized document that sets out its aid policy,” she said. “I see that as one of the major problems of Canadian aid.”

Professor Brown, who worked with CIDA for over a year in northern Ghana, said the agency has a very weak field presence.

“They should send half of the people in Ottawa to the field.”

Brown said CIDA should have a more focused aid program, working with fewer countries, but for a longer time.

“[They should] stay there long enough that they develop an institutional expertise and knowledge so that you know what the hell they’re talking about.”

Professor Rowlands agrees.

“I think if a donor country builds up the size, expertise, and longer links to a country, they’re going to have a much better chance of working with the government in a cooperative, constructive way over the longer term.”


One Response to Experts debate the effectiveness of aid

  1. Pingback: The State of Africa and Westernization as “Development” | Advokat Dyavola

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