Agonizing over Aid

December 16, 2008

     By Duncan Green     

Nothing makes me feel more like a woolly liberal than the aid debate. I seem condemned to see both sides of the argument and veer between the ‘aid as salvation’ and ‘aid as imperialism’ camps. With equal vehemence and seemingly absolute certainty, aid pessimists slug it out with aid optimists, often citing the same evidence, but arriving at completely opposed conclusions. What’s particularly odd is that the most scathing sceptics often work for the aid industry, or at least for the NGOs. It’s a bit like the Automobile Association urging a mass switch to rail (if only).

The latest anti-aid salvo comes from Jonathan Glennie, in a crisp, well argued book to be published in October (one of the benefits of being in the back-cover-plug business is you get to see stuff early). Jonathan divides up the impacts of aid into

· Direct impacts: in recent years aid has funded lifesaving AIDS drugs for two million people, paid for 30 million bednets, leading to a two thirds reduction in child deaths in Rwanda, and so on. With the exception of the odd dud infrastructure project, this is strongest argument for aid.
· Policy impacts: cue big critique of economic policy conditionality, which I would share
· Institutional impacts: Glennie sees these as overwhelmingly negative. Again I would have some sympathy with this – see the revealing paper on the impact of aid on Ghana, by my colleague Emily Jones or the great article on Afghanistan in June’s Prospect magazine  – but the impact of aid on institutions is complicated; healthcare and education are not just good in themselves, but vital to building accountable institutions
· Macroeconomic impacts: a somewhat flimsy discussion on whether aid does/doesn’t lead to growth, and whether growth does/doesn’t lead to poverty reduction, plus that staple debating point of aid economists, Dutch Disease.

So aid has good points and bad points (shock!). The interesting thing is what happens next – Jonathan concludes that we need ‘less and better aid’, whereas Oxfam (like most of the aid industry) plumps for ‘more and better aid’. I’m not sure there is any rigorous way of weighting aid’s positives and negatives, because they mix up things you can measure and things you can’t – short term growth, the emergence of political institutions, citizenship, rights and long term development.

Jonathan slags off Oxfam and others for being ‘caught in a curious double speak. On the one hand they are some of the most forthright critics of aid conditionality and its harmful effects on Africa. On the other, they are the most vocal of all of aid’s advocates.’ But is that such a contradiction? We are arguing (based on what we have seen on the ground) that aid can be improved, the good impacts strengthened, the bad impacts contained. He thinks aid is beyond repair. Glennie uses a wonderful syllogism from the classic British political comedy ‘Yes Minister’ to caricature aid optimists’ argument, ‘Something must be done; this is something; therefore we must do it.’

But I have my doubts about the psychology underpinning the oppositionalist line as well – long experience in NGO-land shows how much safer we find it to oppose than to propose solutions. Proposing things runs the risk of winning, with all the anxiety that brings that you will be proved wrong, or have been coopted or conned. This may help explain why NGOs can be so grudging in their recognition that aid systems are improving in many respects. There is simply no comparison between the days of no-questions-asked slush funds for dictators like Zaire’s Mobutu, and how aid is managed today, but we seldom acknowledge this.

All this is covered in From Poverty to Power (more on aid here), including a handy table comparing the work of three top aid gurus, Jeffrey ‘optimist’ Sachs; William ‘pessimist’ Easterly and Paul ‘Bottom Billion’ Collier. I conclude that aid can (and must) be designed so as to strengthen, rather than undermine, the ‘social contract’ between citizen and state that lies at the heart of development. Rich countries have a moral obligation to provide ‘more and better aid’, but we should certainly not put all our eggs in the aid basket or assume that aid alone can ‘make poverty history’ (to coin a phrase). The main arena of development is national, (where most of Oxfam’s work takes place) and the main actors are active citizens and effective states (at least I agree with Jonathan on that).

With two big aid summits scheduled for the autumn (in Accra on aid effectiveness, and Doha on ‘Financing for Development’), expect to see much more jousting between optimists and pessimists, each arguing their case with absolute conviction. If I am among them, please remind me of this admission of self doubt…

Last word goes to Gebreselassie Yosief Tesfamichael, Eritrea’s Finance Minister, in the wake of the Gleneagles summit, which in stark contrast to Hokkaido, made real advances on aid:

‘By many measures, it’s been a great year for Africa, with debt relief, awareness-raising concerts and G-8 leaders pledging more aid. I’m gratified the world has turned so much attention to my continent. At the same time, a voice inside me wants to shout: “Wait. This is not the way real development happens! … We continue to ignore the stark lesson that externally imposed development models haven’t gotten us far. The only way forward is for Africa to drive its own bus and for the driver and passengers to be in full agreement about where they’re going. That said, we do need help filling up the tank.’


December 16, 2008
Duncan Green