Mr Gordon Bridger, formerly of DFID, gave a slide show presentation arguing that aid has been mis-directed. He quoted Lord Lawson: "British aid on balance did more harm than good".
INTRODUCTION
It is now nearly half a century since a formal British aid programme was established under the dynamic leadership of an enthusiastic Minister - Barbara Castle. It is my contention that in the last few decades the British aid programme has lost its way and is far from serving its original noble objectives.
The purpose of this talk is to explain what I think has gone wrong.
DFID CLAIMS
It has never been easy to assess the impact of foreign aid programmes on developing countries and a recent House of Lords Economics Committee report which evaluated DFID’s work concluded that they “could not find any evidence of a positive impact on recipients of aid” ( House of Lords Economics Committee -2012).
However DFID has recently published the following in its annual report:
“Achievements 2012 -13 include:
- 30.3m people, including at least 14.6m women worked their way out of poverty by providing them with access to financial services.
- Prevented 12.9m children and pregnant women going hungry.
- Helped 33.4m people to hold their authorities to account and have a say in community development
These claims, and indeed many more (84m people) would be difficult enough to obtain in a developed country and could only be secured after many years study, at very great cost.
On challenging what appeared to me to be improbable claims DFID staff replied “ These indicators are a measure of ’access’ to financial services and not a measure of poverty” thereby undermining the official claim made by DFID in its annual report.
Curious to know how they measured access to financial services I was provided with a country data, which purported to show not only country but gender breakdown. In four of these countries the gender breakdown differed from the totals in two cases by quite significantly, but more important several of the claims seemed highly improbable. Is it likely that in Yemen of the 30,000 who benefited 20,000 were women? In Burma as many as 30,000 benefited of whom 30,000 were men and 2,000 women. In Nigeria the total came to 7m, and the some 20m benefited from unexplained “Private Sector Department “ of whom 9,970m were women.
Not only are these statistics implausible and sometimes incorrect but the DFID claim that they have helped people out of poverty is highly misleading.
Since DFID phased out almost all project aid many years ago and now gives most of its financial aid in the form of grants to public sector institutions, International agencies and NGOs, evaluating the impact of its aid is all but impossible, though obviously there will be many cases where success can be claimed. But using as the previous Minister did, an example of a successful water supply scheme in Ethiopia, to justify providing the Government with some £330m is far from convincing.
Much of its aid goes to unaccountable international institutions and organizations that distribute aid on DFID’s behalf.
HOW EFFECTIVE IS BRITISH AID?
Lord Lawson recently stated in a radio interview that he thought “British aid, on balance did more harm than good”. Regretfully, having spent a lifetime working for national and international aid programmes and while accepting that there must obviously many good projects and programmes there is a great deal in what he says..
While there is a good moral case for a British aid programme because it is now so large and being disbursed primarily in order to meet a spurious aid target of 0.7% of GDP which was set some 50 years ago, that much of it is misdirected supporting incompetent public sectors and misused and corrupt Governments. Furthermore DFID’s professional capacity to manage the aid programme has been drastically diminished by loss of experienced staff, and by out-sourcing professional work and by giving aid in forms which are difficult, indeed impossible, to audit.
An increasing number of scandals have been reported in the press as a result of recipients misusing aid – Uganda, Malawi, Tanzania, Nepal, CDC, Kenya, have all been subject to concern about the misuse of aid, while the press reports similar stories about Ethiopia, Caribbean and the European community aid. Regretfully I believe that most of these stories are true and are ones, which never occurred, in a more carefully planned and monitored during the earlier decades of British aid. programme.
ANALYSING THIS CLAIM
I propose to analyze my concern about aid under the following headings:
External international factors, internal administrative management, evaluations by the public sector, evaluation by academics, and personal comments by DFID staff.
EXTERNAL INTERNATIONAL FACTORS
In the 1960s when aid programmes started in earnest there were very many countries that were justified as aid recipients. Thanks to oil price rises, higher commodity prices and self help many countries in the Middle east, in Asia and Latin America no longer receive, or justify aid. Justified recipients are now a few countries in South Asia and African countries south of Sahara.
Meanwhile the number of donors and the amount of aid has increased tremendously. In the 1960s the USA increased its aid dramatically and many new donors such as Japan, Germany, the Scandinavian countries joined in while the United Nations and the World Bank increased their aid. In the 1970s and 80s there was great competition between donors to provide aid and one often found oneself in a queue of donor missions waiting to see an overwhelmed Minister in a recipient country.
As a result of this increased aid many of the urgent infrastructure investments which needed financing and for which the public sector had a traditional management capacity were funded and donors had to find novel ways of disbursing funds through rural development and balance of payment support.
Further disbursement problems emerged in ex colonial countries by the withdrawal of experienced expatriate staff and in many by political turmoil and instability.
All these factors meant it became increasingly difficult to find enough projects to fund and in the 1980s and 1990s faster disbursing forms of aid were devised.
In more recent years the Chinese and private foreign investors have provided more easily accessible and more politically and personally rewarding forms of aid than the traditional aid donors.
INTERNAL FACTORS
When the Ministry of Overseas Development was set up in 1965 it possessed and built up a large quite unique cadre of professional expertise. There were several education advisers, a large agricultural team, medical advisers, engineers as well as many economists, and many very experienced administrators with overseas experience. It was by far the best development agency in the world.
An important policy instruction by the Minister was that we should phase out budgetary aid, which many ex colonial countries were receiving as soon as possible. The reason for this instruction was that a) It undermined local effort b) It allowed Governments to divert their own funds to other ends c) It was impossible to audit since it went mainly on staff and services
d) It was not easy to phase out because staff implications.
However, by around 1972 we had achieved this for all our major aid recipients (but not minor Dependences) and were able to concentrate of project aid.
However, in the late 1980s and 1990s project aid was phased out as there was more than enough available and budgetary aid was reintroduced as the only way that the amount of available aid could be disbursed. The emergence of “sector aid” programmes for health and education, and community programmes for local governments were merely other forms of budgetary aid, being annual grants to specific Government departments all being almost all used to pay public servants and provide them with services. Auditing these funds is all but impossible, and enables many governments to misuse them or divert funds to other personal or public ends. One US study (
Lancet 10/2010) claimed that some 60% of all health aid to Africa was diverted to other sources. An expert working in Africa stated that farmers were no longer purchasing medicines as there were so many fakes being sold.
EVALUATIONS – PUBLIC
In the Public Sector there have been serious criticisms by the Public Accounts Committee, the Select Committee on International aid, the House of Lords Economics Committee as well the National Audit Office and the International Commission for the Evaluation of Aid.
While usually very critical of the management of the aid programmed none of them have appreciated that the unsatisfactory nature of the programmed aid arises from the way that it is disbursed and the determination to meet a spurious aid target. Their urging DFID to devote more staff to monitoring how the aid is spent is not a solution. There has been a failure of all these institutions to appreciate that budget type aid is the problem.
EVALUATIONS – EXTERNAL
Over the last few years there have been many books by serious academics on aid to Africa in particular which have been highly critical of foreign aid. Dambisa Moya, a Zambian Economist in ‘Dead Aid” argues that it should all be stopped. John Glennie in “The Trouble with Aid” argues for a 50% reduction of aid. Linda Polman in “The Crisis Caravan” stresses how NGOs have often prolonged wars in Africa. Peter Gill “Famine and Foreigners” about Ethiopia claims there are over 4,000 NGOs in the country all clamoring for projects. Other more general criticism of aid comes from Richard Dowden, Chairman of the Royal Africa Society, Michaela Wrong, and Professor Robert Caldorissi all have trenchant criticisms of aid to Africa.
Finally there have been many articles in newspapers, which have been very validly critical of aid.
EVALUATIONS – PERSONAL
Although in some ways the most slender of criticisms they are indeed for me the most important as they come from professional staff who have spent many years working with and for DFID and who have a strong public sector ethic, which thanks to aid targets and career prospects has been severely undermined in DFID
Here are some e-mails I have received from professionals working for DFID:
“There is so much money being given in aid that it is seriously distorting things and encouraging corruption. It drives up exchange rates and across Africa countries are getting budget support do not have to bother much about raising revenues”.
“Meanwhile DFID is dumping money with international bodies as fast as possible -it’s a way of getting rid of funds with a minimal of effort”.
“The local auditor told me that he was starved of funding as a deliberate strategy- nothing he can do about it if he wants his pension.”
“Gordon we are cheering you on but we have to keep quiet if we want contracts.”
“DFID is a juggernaut out of control.”
“DFID staff morale is very low, staff cuts and loss of reputation for competence – exposure is the great fear”
“ I am ashamed to work for DFID”
CONCLUSIONS
There are of course many good aid projects within the huge £11billon budget and many worthy individuals and agencies, but the way aid is disbursed and the determination of politicians to meet an international aid target seriously undermines the validity of the British aid programmed.
David Cameron in the Conservative policy on aid promised that all aid would be properly audited. It is not and cannot because of the way funds are managed.
The regulatory bodies such as the National Audit Office and the ICAI have been far too weak as so many auditors were with our Banks, and have been unwilling to confront the real problems which have created what one staff member has described as “Juggernaut out of control”.
Britain can play and should a valuable role in helping poor people in poor countries by providing expertise, education and aid to specific identified projects. It needs be however a smaller better quality programme which is not target driven.
Gordon Bridger (BscEcon. M.A.Econ)
• This is an edited version of talk given to the House of Lords Conservative Council on Foreign and Commonwealth Affairs in August 2013.
• The author is a retired development economist with 40 years of experience having worked for the British Government ( when the Ministry of Overseas Development was set up, as a Director of Economics), International Agencies and consultants. He is author of several books on development.