Official Development Aid is aid from governments, which can take the form of either bilateral aid – direct from donor country to recipient country, or multilateral aid, which is channelled through institutions such as the World Bank.
The value of Official Development Aid is much greater than aid channelled through non-governmental organisations such as Oxfam, and so has the potential to have a much greater impact.
You might like to read this post first: arguments and evidence for official development aid before reading the eight criticisms below!
Aid hasn’t generated economic growth in many recipient countries
The most vociferous recent critiques of Official Development Aid comes in the form of Dambisa Moyo’s recent book (2009) Dead Aid: Why Aid is not Working And How there is another way for Africa. At root, her most basic criticism is that Official Development Aid hasn’t actually generated significant economic growth in recipient countries. According to Moyo
‘Over the past thirty years, the most aid-dependent countries have exhibited growth rates of minus 0.2% per annum. Looked at as a whole, Africa has had over $1 trillion dollars of aid money pumped into it over the last 60 years and not much good to show for it.’
Aid stifles the development of small businesses.
Moyo explains how this works as below…..
‘There’s a mosquito net maker in Africa. He manufactures around 500 nets a week. He employs 10 people, who each have to support upwards of 15 relatives. However hard they work, they cannot make enough nets to combat the malaria-carrying mosquito.
Enter vociferous Hollywood movie star who rallies the masses, and goads Western governments to collect and send 100, 000 mosquito nets to the affected region, at a cost of $1 million, The nets arrive, the nets are distributed and a good deed is done.
With the market flooded with foreign nets, however, our mosquito net maker is promptly out of business. His ten workers can no longer support their dependents.
Now think of what happens 5 years down the line when the mosquito nets are torn and beyond repair, we have now mosquito nets, and no local industry to build any more. The long term effect of the ‘aid injection’ has been to decimate the local economy and make the local population dependent on foreign aid from abroad.
Aid Encourages Corruption
| In 2004 the British envoy to Kenya, Sir Edward Clay, complained about rampant corruption in the country, commenting that Kenya’s corrupt ministers were ‘eating like gluttons’ and vomiting on the shoes of foreign donors. In February 2005 (prodded to make a public apology), he apologised, saying he was sorry for the ‘moderation’ of his language, for underestimating the scale of the looting and for failing to speak out earlier |
According to Dambisa Moyo – If the world has one image of African statesmen, it is one of rank corruption on a stupendous scale. One of the best examples of this is Mobutu, who is estimated to have looted Zaire to the tune of $5 billion. He is also famous for leasing Concorde to fly his daughter to her wedding in the Ivory Coast shortly after negotiating a lucrative aid deal with Ronald Regan in the 1980s.
Moyo further argues that at least 25% of World Bank Aid is misused. One of the worst examples is in Uganda in the 1990s – where it is estimated that only 20% of government spending on education actually made it to local primary schools.
Moyo argues that growth cannot occur in an environment where corruption is rife. There are any number of ways in which corruption can retard growth.
- Corruption leads to worse development projects – corrupt government officials award contracts to those who collude in corruption rather than the best people for the job. This results in lower-quality infrastructure projects.
- Foreign companies will not invest in countries where corrupt officials might siphon off investment money for themselves rather than actually investing that money in the country’s future.
- Aid is corrosive in that it encourages exceptionally talented people to become unprincipled – putting their efforts into attracting and siphoning off aid rather than focussing on being good politicians or entrepreneurs.
Too much aid money is spent on salaries, admin fees and conferences
Not only are these often secretive and not open to account, but this also means reduced money spent on actual development. The aid industry employs hundreds of thousands of people worldwide. For example, in the UK DEFA spent £248 million on administration in 2007/08. This has led to some referring to aid agencies as the lords of poverty – ironically, it is actually in the interests of these bureacractic agencies for poverty to exist, or thousands of people would be out of work.
Dependency theory argues there is a political agenda to aid
The allocation of US and UK aid has often depended on whether the political ideology of the developing country has met with Western Approval. Dependency theorists argue that the main point of aid is to make the recipients dependent on the donors. Many neo-marixsts argue that along with aid packages comes western values, advice, culture, and aid merely ensures that the interests of west are maintained.
- During the cold war developing countries were rewarded with aid if they aligned themselves with the Capitalist west and against the Socialist regimes of Eastern Europe and China. Both the UK and U.S. governments refused aid to the Ethiopian government in the early 80s on the grounds that the government was Socialist.
- A similar focus is also found in US military aid. Much military aid was sent to South America where it was used by right wing governments to repress socialist movements that were opposed to the interests of US multinationals.
- Even with the fall of the cold war, countries are still rewarded for promoting western interests. Kenya was rewarded in 1991 for providing the US with port facilities during the gulf war while Turkey was denied US aid for not allowing them to lease its air bases.
- In 2005 developing nations were rewarded for assisting the Bush regime’s war on terror.
NB Tied aid is now illegal in the UK by virtue of the International Development Act, which came into force on 17 June 2002. Other countries, however, still only provide aid on the basis that a proportion of the aid money is spent on products produced by the donor country.
The World Bank aid has traditionally required countries to undertake ‘Structural Readjustment Policies’ (SAPs)
The World Bank and International Monetary Fund (IMF) are the largest and most influential of the International Financial Institutions (IFIs), and these have pursued a neoliberal development agenda since the 1980s. The damaging strings that the World Bank & IMF attach to aid, loans and debt relief often make it more difficult for poor countries to effectively tackle poverty. These strings often force poor countries to undertake Structural Adjustment Programmes – cut vital spending on health and education, or to privatise their public services, which provide opportunities for international companies to take these services over. Tanzania, Guyana and Bolivia have all been told that they must privatize their water supplies in order to get millions of pounds in aid from the world bank[1] [2]
Top down aid is often irrelevant to the countries receiving it!
Much Official Development aid has focused on monstrous projects such as the building of dams and roads which have sapped local initiative harmed the environment and lead to social injustices[3].
Focusing on aid for developing countries suggests that recipients are helpless.
Live Sid Yasmin Aibhai- Brown argues that concerts such as Live Aid perpetuate the idea of Africa as a helpless continent incapable of helping itself, whereas the opposite is actually true. [4]
[1] http://www.actionaid.org.uk/index.asp?page_id=1365 – extract about water privatization in Tanzania from Action Aid.
[2] See Chapter on Bolivia water privatisation, The Corporation DVD
[3] See http://www.whirledbank.org/environment/dams.html for a critical look at the World Bank’s funding of dams in half a dozen developing countries.
[4] http://www.opendemocracy.net/globalization-G8/aid_2650.jsp – a critique of events such as Live Aid.