George Osborne, on rare occasion, can do the right thing. Whether or not he does it for the wrong reasons is another matter. In the last comprehensive spending review, he ring-fenced development spending. This means the Department for International Development (DfID) is getting generous increases in funding, at a time where most British government departments are being asked to cut up to 25% of their budgets.
This caused a furore amongst British conservatives. They fumed at the perceived waste of money (spent on foreigners, of all people!), when other departments would rejoice at finding a five-pound note on the floor. The right-wing press was enraged that billions of pounds are being poured into countries like Pakistan which can apparently afford nuclear weapons but not universal education. They point out that corruption has sucked billions over the years in development spending – with recipient governments using the money meant for poverty-reduction to fund vanity projects, or for self-enrichment. They clamour that after nearly 6 decades of ‘development’, many countries in the global south are not better off, and indeed some are worse off, seemingly because aid provides perverse incentives. Echoing Dambisa Moyo’s arguments in her book, Dead Aid, they argue that aid discourages recipient governments from forming a proper tax-base, relying on ‘hand-outs’ instead. Further it supposedly discourages productive investment when money with few strings attached seems to forever come their way. In other words, easy money does nothing to stimulate poverty-reducing economic growth.
As a result, many would rather spend DfID’s billions on defence to strengthen the armed forces which have been starved by cuts. Reluctantly, these same people concede that some of this money could be used by the army for humanitarian relief operations. This, the argument goes, would serve our interests and fulfil whatever moral obligations we are deemed to have.
The problem is, the assumptions used to justify the end of development-spending are too simplistic. It is undeniable that aid has been corrupted in many instances, and certainly fuels corruption where accountability mechanisms are weak. This is turn will have contributed in many cases to the negative cycle of aid dependency described by Moyo. However corruption amongst aid recipients cannot solely be explained by aid itself. Corruption exists where political, economic and social institutions have failed. Corruption doesn’t exist because of relatively easy-money. It spawns where there are no expectations of improvement. It spawns where easy-money is the only money coming your way, because there are no worthwhile jobs or functioning institutions that will help you get along in life. Corruption is a problem of governance. The embezzlement of aid is merely a symptom of this. And more often than not, the poor institutional design which fostered corruption in developing countries is a direct consequence of colonisation. Drawing borders around populations who had nothing in common, and designing institutions modelled on Western lines, which were completely alien to local customs, meant that former imperial powers left behind ill-suited governance models. As these structures failed, corruption took root.
However, we mustn’t make too much of corruption either (aid induced or not). It cannot explain on its own the relative lack of human development in the global south over the last 60 years. Indeed, lest we forget, the global economic system is highly skewed in favour of industrialised nations. Most developing countries face unfair trading rules, an unregulated transnational economy which encourages a race to the bottom in wages and labour-standards, and have little power over global economic governance. Therefore, the claim that corruption has held back developing countries must be treated with caution. It is also because the rules are stacked against them.
And if that weren’t challenging enough, it is often forgotten that many countries in the global south were forced to go through severe structural adjustment programmes during the 1980s by their northern creditors. The former were struggling to repay the debts they had accumulated as a result of incompetent economic governance (partly derived from the poor advice of donor countries!). Therefore the latter sought draconian spending cuts in developing countries, to ensure that those afflicted by the debt-crisis could continue their repayments (as well as conform to the emerging neoliberal paradigm). Structural adjustment in the south led to cuts in subsidies and services, precipitating a tumble in incomes, education and health levels. This cancelled out much of the human development progress made in the previous 30 years. Aid certainly wasn’t the problem.
These observations, however, lead us to an uncomfortable question. Would it make a shred of difference if we ceased development spending altogether? If it either causes the problem, or has not made any difference to the structural forces creating it, why keep spending?
‘What if’ questions are always dangerous, but in all probability where development assistance would stop, poverty would increase. Whatever happens, some aid does reach the poorest – and they need it. Remove it, poverty worsens with all the potential ramifications: instability, conflict, famine, misery. Stop technical assistance to governments, whether in governance, agriculture, education or health – and chances are that for some, service provision would collapse, and where public service collapse, corruption moves in. Decades of spending might not have removed the obstacles to development, but removing whatever good it does is not the solution.
And what about influence? Development assistance has always been a tool to influence other countries. Whatever else we may claim, it is an extension of foreign policy. Scrapping aid means scrapping influence. Admittedly, this influence has not always been wisely used – more often than not it has perpetuated corrupt regimes (“to protect our interests”, let us not forget). But if you can’t use a tool properly, who is the blame? You, or the tool?
In essence, those who wish to scrap aid are barking up the wrong tree. Certainly, it hasn’t done as much good as it should have, but mull on this: If development assistance hasn’t managed to tackle the obstacles faced by poorer countries, shouldn’t we change the way we ‘do’ development instead of scrapping it? And if it has been such a source of influence, even poorly used, why sacrifice it?
What we need then is a well-funded development-department, but which does things differently. Ideally, aid – that is financial assistance – should be reduced to a trickle as development becomes about building capability. Building capability is technocratic jargon for improving the way a state functions – whether forming a proper judiciary, police force, finance department, political system and so on. It means providing the know-how and sharing the knowledge to build enabling economic, political and social systems. It is therefore much more about learning and sharing, and experimenting with governance structures, and less about building schools. In the ideal development partnership, the “donor” provides the resources to train officials, and shares knowledge and know how to enable the “recipient” to 1)build an efficient revenue collection system, 2) use it, and 3) use the new revenue to build the school itself.
To a certain extent, DfID’s 2011 Building Stability Overseas Strategy (BSOS) is precisely about that. Couched in the language of national self-interest to justify the increased expenditure associated with it, it is focused on improving socio-economic and political governance in fragile states. It is a start towards tackling the structural causes of poverty. The hope is that in the years to come these states will be able to raise their own money and conduct their own projects with input and know-how from others. This would hopefully prevent their collapse into an institutional vacuum which then requires tens of thousands of troops to contain (yes, this means Afghanistan…or Somalia…or Syria in a few years?).
However, there are two things we must be cautious about. The first is that this “knowledge-sharing” model of developing does still feel awfully like late-colonialism. This was the era in which the Imperial powers sought to – patronisingly – re-mould to institutions of their colonies to facilitate their ‘self government’ after independence. This in effect meant teaching “them” to govern like “us” – raising the obvious point that “we” often don’t know any better, especially when “we” don’t understand the local context. The second, related point is that if development-assistance (in the North) goes down this path, it must do so sensitively. It must learn from the South, where emerging powers practice ‘partnerships’, not “donor-recipient” relationships; where development-assistance is demand driven, not imposed by the donor-technocrats. In essence, it must look more like ‘South-South’ development: projects between two or more Southern countries, based on sharing knowledge and know-how, behaving like equal partners conducting a business transaction for mutual benefit. Not a patronising disbursement of funds. Therefore Mr Osborne, thank you for the money – this time let’s use it better.