Rethinking aid

Rich and emerging market nations have agreed to put up US$49.3 billion to top-up a World Bank fund to aid the world’s poorest countries.  World Bank president Robert Zoellick said the commitments marked an 18 per cent increase from the last time the International Development Association (IDA) was replenished, in 2007. Furthermore, this increase in the fund was made possible in part because some major developing countries stepped up with pledges. 

Although it was not stated how much the individual countries contributed, China was expected to contribute more, especially since it has gained more voting power within the World Bank. IDA is the world’s largest fund, and it is intended to assist the world’s poorest countries, many of them in Africa. It offers grants and interest-free loans for such basic purposes as providing the following: clean water, improved sanitation, education, and better infant and maternal care to the world’s neediest. The fund is replenished with new money at three-year intervals. 

The increase is critical to bettering the lives of the less fortunate in the world; and while we support more money going towards these poor countries, the World Bank must stop and take a long and hard look at the countries to which it is administering aid. It is troubling that, despite billions of dollars of aid money going towards some of the poorest countries, over the years, some people’s lives have improved only marginally. Surely, red flags ought to go up, indicating that something is amiss. It has often been said that widespread corruption within governments has resulted in aid money not reaching the poor, but is instead siphoned off to support the lifestyles of corrupt politicians. This can be illustrated by comparing the current lifestyles of those officials and leaders with those of the people. In Zambia, for example, former president, Frederick Chiluba, has been charged with the theft of state funds. This means that donor agencies in particular, and the World Bank specifically, ought to take a closer look at where aid monies are going. Donors need to be more observant and to ensure that aid money is going towards the poor, and the poor only.

Secondly, the World Bank must take a long and careful look at how and where aid is being administered. Giving alms to Africa, for example, remains one of the biggest ideas of our time. Observers say that governments are judged by it, celebrities proselytise the need for it, and people call for it. Interestingly, calls for more aid for Africa are growing louder, with advocates pushing for the doubling of roughly US$50 billion in international assistance that already goes to Africa each year. But development economists have a problem with giving aid to these countries. Evidence overwhelmingly demonstrates that aid has made the poor poorer and has retarded growth in Africa. They say that the “insidious aid culture has left African countries more debt-laden, more inflation-prone, more vulnerable to the vagaries of the currency markets, and more unattractive to higher-quality investments”. 

A significant amount of aid money goes towards the development and improvement of social programmes and basic amenities, such as education, water and sanitation. This is another problem. For long, these have been the conventional focus of aid-giving, and it is time that moves are made beyond these objectives. Social development is critical, but is often done to the exclusion of economic development, which is the kind of development required to empower the poor by giving them ways to earn sustainable incomes to support themselves, live independent lives, and enjoy higher standards of living. Failure to pursue this kind of development has resulted in the poor having to depend upon aid for survival year after year. This outcome undermines the intention of aid money, and fails to help the poor in areas that matter the most.